RMC No. 35-2017: Clarifies the imposition of Capital Gains Tax on sale, exchange or other disposition of real properties

Key points

1. 6% final tax. A final tax of six percent (6%) applies to presumed capital gains from the sale, exchange or other disposition of capital asset real property located in the Philippines. This includes pacto de retro sales and other conditional sales. The base is the gross selling price or fair market value, whichever is higher.
2. Presumed gain needed. To be liable, there must be a presumed gain from the sale, exchange or disposition of the property.
3. Tax declaration alone. Merely issuing a tax declaration, with no sale, exchange or other conveyance, is not subject to Capital Gains Tax. The tax is a direct consequence of the sale, transfer or exchange.
4. Basis of the tax. It is the profit or gain presumed realized by the seller that triggers the 6% tax, not the transfer of ownership or possession in itself.

Who is affected

• Sellers of real property classified as capital assets