Law Summary
Final Tax on Capital Asset Real Properties
- Imposes a 6% capital gains tax on presumed gains from sale or transfer of real properties classified as capital assets.
- Tax is based on the higher of gross selling price or fair market value as determined by the BIR Commissioner.
- Includes pacto de retro and conditional sales.
- Dispositions to government or government-controlled corporations allow taxpayer to choose normal income tax or 6% final capital gains tax.
Time and Place for Capital Gains Tax Payment
- The seller must file the Capital Gains Tax Return and pay the tax within 30 days from the sale or disposition.
- Payment and filing must be done at an Authorized Agent Bank (AAB) within the Revenue District Office (RDO) that has jurisdiction over the property's location.
Creditable Withholding Tax on Ordinary Asset Real Properties
- Imposes withholding tax on the buyer (withholding agent) based on gross selling price or fair market value, whichever is higher.
- Tax rates vary depending on whether the seller is habitually engaged in real estate business:
- 1.5% if selling price is ₱500,000 or less.
- 3% if selling price is more than ₱500,000 but not more than ₱2,000,000.
- 5% if selling price exceeds ₱2,000,000.
- If seller is not habitually engaged in real estate business, the withholding tax rate is 7.5%.
- Certain sellers are exempt from withholding tax per Revenue Regulations No. 2-98.
Time and Place for Payment of Creditable Withholding Tax
- Withholding tax must be paid within 10 days after the end of the month in which the transaction occurred.
- Filing and payment are done at an Authorized Agent Bank within the RDO with jurisdiction over the property's location.
- Taxes withheld in December must be filed on or before January 25 of the following year.
Tax Clearance Certificate
- Upon full payment and submission of the respective tax returns, the Revenue District Officer issues a Tax Clearance or Certificate Authorizing Registration.
- Such certificates are necessary for registration of the real property in favor of the transferee.
Repealing Clause
- Any BIR regulations, memorandum orders, circulars, or issuances inconsistent with these regulations are repealed, amended, or modified as appropriate.
Effectivity
- Regulations take effect 15 days after publication in a newspaper of general circulation.