Capital Gains Tax

Under the NIRC Chapter III Tax on Individuals Section 24 (D)

1. In General- the provisions of Section 39 (B) notwithstanding, a final tax of 6 percent based on the gross selling price or current fair market value as determined in accordance with Section 6 (E) of the NIRC, whichever is higher, is hereby imposed upon capital gains presumed to have been realized from the sale, exchange or other disposition of real property located in the Philippines classified as capital assets, including pacto de retro sales and other forms of conditional sales, by individuals, including estates and trusts; provided, that the tax liability, if any, on gains from sales or other dispositions or agencies or to government-owned or controlled corporations shall be determined either under Section 24 (A) or under this subsection, at the option of the tax payer.
2. An Exemption from the payment of capital gains tax on sale of real property is available to residents who sell their principal residences for the purpose of building or acquiring a new principal residence within 18 months from the date of sale. The proceeds of the sale must be fully utilized in acquiring or building the new principal residence. The exemption may be availed of once every 10 years.

For corporations, under Chapter IV Sec. 27 (D)(5), a final tax of 6 percent is imposed on the gain presumed to have been realized on the sale, exchange or disposition of lands and/ or buildings which are not actually used in the business of a corporation and are treated as capital assets, based on the gross selling price or fair market value as determined in accordance with Section 6 (e) of the NIRC, whichever is higher of such lands and/ or buildings.