REAL ESTATE TAXATION

Jona U. Dimalanta, CPA, MBA, REB

TAXES RELATED TO REAL ESTATE TRANSACTIONS

RPT – REAL PROPERTY TAX

CGT - CAPITAL GAIN TAX
DST - DOCUMENTARY STAMP TAX
IT - INCOME TAX
VAT - VALUE ADDED TAX
EWT - EXPANDED WITHHOLDING TAX
EST - ESTATE TAX
 Real Property Tax (RPT)
RPT is simply an annual due for owning a real property (land,
building, improvements, and machinery). RPT is imposed by
Local Government Units (LGUs) as a way to increase their
revenue to fund basic public services.

Tax Base = a fraction of the FMV

Taxable fraction (assessment) - depends on the use of the
property(whether commercial, residential, agricultural, etc.).

Assessment Levels:
Cultural: 15% Scientific: 15%. Residential: 20%
Agricultural: 40% Commercial: 50% Industrial: 50%
 Seller and Buyer’s Responsibilities
Seller’s Responsibility:
1. Income tax, if the property to be sold is an ordinary asset
2. Value-added tax/Percentage tax, if the property to be sold is an
ordinary asset
3. Creditable Withholding Tax, for real properties sold by
habitually engaged real estate sellers
4. Capital Gains Tax, if the property to be sold is a capital asset
5. Documentary Stamp Tax

Buyer’s Responsibility:
1. Transfer Tax
2. Registration Fee
An act amending the National Internal Revenue Code (NIRC),
as amended and for other purposes.

Sec. 6 – NIRC
Power of the Commissioner to make assessments and
prescribe additional requirements for tax administration and
enforcement.
For purposes of computing any internal revenue
tax, the value of the property shall be, whichever is
the higher of:

(1)The fair market value as determined by the

commissioner of internal revenue.

(2) The fair market value as shown in the schedule

of values of the Provincial and Assessors.
 MEMBERS OR PARTY TO THE
RECOMMENDATION OF ZONAL VALUE

Provincial/City Assessor
Realtors/Appraisers
BIR

Each will give their recommended values for every section zones of lots located in the city or
municipality, using the Maps of Locations and Actual Inspection of the area. The 1st two (2)
highest recommended values – Add then total divided by 2 equals the final
value.

PUBLIC HEARING
Forward report to the Asset Valuation Division Ass. Service, BIR, Manila for
review and approval.
 DEFINITION OF TERMS
Residential – For habitation

Commercial – For business

Industrial - Devoted principally to industry as capital

Agricultural – Devoted principally to raising of crops

General Purpose – Raw land undeveloped and underdeveloped area

which has potential for development; must be less than 5,000 square
meters.

Vicinity – Means an area, locality, neighborhood or district about, near,

adjacent, proximate or contiguous to street being located.
 CLAASIFICATION OF LEGEND

RR – Residential Regular CR – Commercial Regular

GL – Government Land GP – General Purpose
APD – Area for Priority Development RC – Residential Condominium
CC – Commercial Condominium I – Industrial
X – Institutional A – Agricultural
PS – Parking Slot CL – Cemetery Lot
 AGRICULTURAL LANDS
CODE CLASSIFICATION CODE CLASSIFICATION CODE CLASSIFICATION

A1 RICELAND IRRIGATED A21 DURIAN A39 SEA SHORE

A2 RICE LAND UNIRRIGATED A40 RESORT
A22 RAMBUTAN
A3 UPLAND A41 SANDY/STONY
A23 MANGO
A4 COCOLAND A42 PRAWN POND
A5 CITRUS LAND A24 MANGROVE A43 SORGHUM
A6 FISHPOND A25 CAMOTE/CASSAVA A44 IPIL – IPIL
A7 SWAMP A26 BAMBOO LAND A45 KANGKONG
A8 NIPA LAND A27 PEANUT LAND A46 ZARATE
A9 COTTON LAND A28 SOY BEANS LAND A47 VEGETABLE LAND
A10 COGON A29 GRAPE VINEYARD A48 COFFEE
A11 ABACA LAND A30 PEPPER LAND A49 MOUNTINOUS/HILLY AREAS
A12 ORCHARD A50 OTHER AGRICULTURAL LAND
A31 MINERAL LAND
A13 PINEAPPLE LAND
A32 NON METALLIC MINERAL LAND
A14 BANANA LAND
A15 PASTURE LAND A33 COAL DEPOSIT * Agricultural/Raw land not less than
A16 CORN LAND A34 AFRICAN OIL LAND 5,000 square meters
A17 SUGAR LAND A35 RUBBER LAND
A18 TOBACCO LAND A36 FOREST LAND/TIMBER LAND
A19 CACAO A37 HORTICULTURAL LAND
A20 LANZONES A38 SALT BEDS
 CGT – CAPITAL GAINS TAX
Imposed upon all persons – Natural or Judicial, Resident
or Non-Resident, including Estates and Trusts who:
Sell, Exchange or Dispose of Real Property located in the
Philippines classified as “CAPITAL ASSET”
“SALE” includes Pacto de Retro Sales and Other forms of
Conditional Sales.
Tax base is the highest among:
1. Gross Selling Price,
2. Fair Market Value indicated in latest Tax Declaration, or
3. Zonal Value as determined by the BIR.
 Capital Asset
“CAPITAL ASSET” as defined under the Tax Code, refers to
taxpayer’s property that is not any of the following:
1. Stock in trade;
2. Property that should be included in the taxpayer’s
inventory at the close of the taxable year;
3. Property held for sale in the ordinary course of the tax-
payer’s business;
4. Depreciable property used in the trade or business; and
5. Real property used in the trade or business.
 CGT Exemption
1. An exception may be availed when the property involved
is the Principal Residence and its proceeds of the sale are
utilized in acquiring or constructing a new principal
residence. This privilege may be availed provided that:
- the property sold must be the principal residence;
- there must be full utilization of the proceeds within 18
calendar months from the date of sale of the property*;
and
- BIR is duly notifies within 30 days by the taxpayer the
date of sale thru a “Sworn Declaration of Intent”.
This may only be availed once every 10 years.
 CGT Exemption
Taxable Portion = Supposedly Taxable Amount x Unutilized
Amount/GSP

Taxable Portion x 6% CGT = CGT + 20% p.a. interest starting

on the 31st day after date of sale.

2. Dealer in securities, regularly engaged in the buying and

selling of securities;

3. An entity exempt from the payment of income tax under

existing investment incentives and other special laws;
 CGT Exemption
4. An individual or non-individual exchanging real property
solely for shares of stocks resulting in corporate control;

5. A government entity or government-owned or controlled

corporation selling real property;

6. If the disposition of the real property is gratuitous in

nature (may be subject to Donor’s Tax);

7. Where the disposition is pursuant to Comprehensive

Agrarian Reform Program (CARP) law
 Requirements in paying Capital Gain Tax
1. BIR Form 1706 – Final Capital Gains Tax Return (For Onerous Transfer of Real Property
Classified as Capital Assets -Taxable and Exempt)
2. An original copy and one photocopy of the Notarized Deed of Sale or Exchange
3. Photocopy of the Transfer Certificate of Title; Original Certificate of Title; or Condominium
Certificate of Title
4. Certified True Copy of the tax declaration on the lot and/or improvement during nearest
time of sale
5. “Certificate of No Improvement” issued by the Assessor’s office where the property has no
declared improvement, if applicable or Sworn Declaration/Affidavit of No Improvement by
at least one (1) of the transferees
6. Copy of BIR Ruling for tax exemption confirmed by BIR, if applicable
7. Duly approved Tax Debit Memo, if applicable
8. “Sworn Declaration of Interest” as prescribed under Revenue Regulations 13-99, if the
transaction is tax-exempt
9. Documents supporting the exemption

Additional requirements may be requested for presentation during audit of the tax case
depending upon existing audit procedures.
 Procedures in paying Capital Gain Tax

File the Capital Gains Tax return in triplicate (two copies for the BIR and one copy
for the taxpayer) with the Authorized Agent Bank (AAB) in the Revenue District
where the property is located. In places where there are no AAB, the return will
be filed directly with the Revenue Collection Officer or Authorized City or
Municipal Treasurer.
CGT should be paid within 30 days after each sale, exchange, transfer or other
disposition of real property.

If not stated in the contract, the seller is usually the one who shoulders the CGT.
BASIC PENALTIES FOR LATE FILING AND PAYMENT OF TAXES
25% surcharge on basic tax due
50% surcharge in case of fraud or intent to evade tax
INTEREST 20% per annum based on basic tax due
 Capital Gain Tax History
CGT took effect on September 7, 1979
 1979 – 1985
Tax Base: Selling Price less Cost of Sales or Expenses = Net Gain
Net Gain First Php100K x 10%
In excess of Php100K x 20%
 1986 – 1990
Tax Base: SP or FMV (higher) x 5% = CGT
No CGT for SP: Php500K or FMV: Php300K
 Effective Dec. 15, 1990 Zonal Value took effect
Tax Base: SP, FMV or ZV (highest) x 5% = CGT
 Jan. 1, 1998 Comprehensive Tax Reform Act/RA 8424
Tax Base: SP, FMV or ZV (highest) x 6% = CGT
 1.5% DST – DOCUMENTARY STAMP TAX
It is a tax on documents, instruments, loan agreements
and papers evidencing the acceptance, assignment, sale or
transfer of an obligation, right or property incident thereto.
For filing and payment of DST on sale or transfer of real
property, the form to be used is BIR Form No. 2000-OT
(Documentary Stamp Tax Return/Declaration for One Time
Transactions) in triplicate copy.
The return shall be filed and the tax paid within five (5)
days after the close of the month when the taxable
document was made, signed, issued, accepted or
transferred.
 EXERCISE 1

An 800sqm lot with house was sold for Php3.5M. Per tax
declaration, the FMV of the house is Php1.5M and the lot is
Php1.6M. The zonal value of the lot is Php3,500/sqm. The
sale is subject to CGT.

Compute for the following:

1. Tax Base
2. Capital Gains Tax
3. Documentary Stamp Tax
 ANSWER KEY 1

1. Tax Base
a. SP = Php3.5M
b. FMV = Php1.6M + 1.5M = Php3.1M
c. ZV = Php3,500 x 800sqm = Php2.8M + Bldg. Value
Bldg based on SP = Php3.5M-2.8M = Php700K
Bldg based on FMW = Php1.5M
Therefore, ZV = Php2.8M + 1.5M = Php4.3M
2. Capital Gains Tax = Php4.3M x 6% = Php258K
3. Documentary Stamp Tax = Php4.3M x 1.5% = Php64,500
 EXERCISE 2

Kendrick sold his residential house and lot located at Capitol

Residences, Alabel on July 1, 1998 for Php1M. Area lot is
200sqm and the zonal valuation is at Php4K/sqm. Provincial
Assessor’s FMV for the lot is Php500K and for the building
Php400K. Broker’s commission is 5% of selling price.

Compute for the following:

1. Tax Base
2. Capital Gains Tax
3. Documentary Stamp Tax
4. Broker’s Commission
 ANSWER KEY 2

1. Tax Base
a. SP = Php1M
b. FMV = Php500K + 400K = Php900K
c. ZV = Php4,000 x 200sqm = Php800K + Bldg. Value
Bldg based on SP = Php1M-800K = Php200K
Bldg based on FMW = Php400K
Therefore, ZV = Php800K + 400K = Php1.2M
2. Capital Gains Tax = Php1.2M x 6% = Php72,000
3. Documentary Stamp Tax = Php1.2M x 1.5% = Php18,000
4. Broker’s Commission =Php1M x 5% = Php50,000
 EXERCISE 3
Kyle got Nick as his broker to sell his house and lot for Php1M offering
Nick at 5% commission of the SP, but Nick requested Kyle that he will
overprice the sale for Php1.2M and he will assume the CGT and DST.
Kyle approved the request happy to receive a net of Php1M having no
problem with taxes and commission. Nick is happily computing his
net commission after deducting CGT and DST based on SP or a total
of Php75K and a net of Php125K instead of Php50K if he choose 5%
commission. But Nick forgot to take into consideration the BIR zonal
value of the lot. When Nick went to BIR office to process the papers
for transfer, this is the computation of the BIR Examiner.
Zonal Value of Lot Php2M
FMV of Lot Php1M
FMV of Building Php500K
 EXERCISE 3
Compute for the following:
1. Tax Base
2. Capital Gains Tax
3. Documentary Stamp Tax
4. Broker’s Commission
5. Nick’s Opportunity Loss
 ANSWER KEY 3

1. Tax Base
a. SP = Php1M*
b. FMV = Php1M + 500K = Php1.5M
c. ZV = Php2M + Bldg. Value
Bldg based on SP = Php1M-2M = (Php1M)
Bldg based on FMW = Php500K
Therefore, ZV = Php2M + 500K = Php2.5M
2. Capital Gains Tax = Php2.5M x 6% = Php150,000
3. Documentary Stamp Tax = Php2.5M x 1.5% = Php37,500
4. Broker’s Commission = Php200K – (150K + 37.5K) = Php12,500
5. Opportunity Loss = Php1M x 5% = Php50K – 12.5K = Php37,500

*Declared SP is below actual SP.

 ORDINARY ASSETS
 included in the stock of trade or inventory of the
taxpayer in a normal business operation at the close
of the taxable year.
 real estate properties primarily sold to customers by
the taxpayer in normal course of business
 real estate properties used in business which are
subject to the allowance for depreciation
 real estate properties which are used for normal
course of business by the tax payer
 Value-Added Tax (VAT)
12% VAT
- engaged in the business of selling, developing, leasing or sub-leasing of real
property and those licensed to engage in real estate brokerage business
based on their commission.
- pursuance to real property used in the trade or business of the seller (RR No.
4-07)
In determining the transactions subject to VAT, the following threshold must be
considered:
Type of Property Sold VAT-exempt
Residential Vacant lot ₱1,919,500 and below
Residential House & lot ₱3,199,200 and below
Residential Condominium unit ₱3,199,200 and below
Commercial properties are subject to VAT
 Value-Added Tax (VAT)

Output Tax from Sales

Less : Input Tax from Purchases
VAT Payable

Please note that real estate sales that are exempt from
VAT based on the above threshold shall be subject to 3%
percentage tax.
 Installment Sale
A sale is considered as cash or deferred payment if the initial
payments in the year of sale, cumulative payments received
during the taxable year, exceed 25% of the gross selling price.
A . Deferred payment/Cash basis
The transaction shall be treated as a cash sale which makes
the entire selling price subject to VAT in the month of sale.
B. Installment basis
Each installment payment actually and/or constructively
received by the seller is subject to VAT.
The monthly VAT return should be filed on or before the 20th day of the following month while the
quarterly VAT return should be filed on or before the 25th day of the following month.
 Expanded Withholding Tax
Tax which is withheld by the buyer/withholding agent
from his payment to real estate dealers, developers,
operators and persons or entities who are considered to be
habitually engaged in real estate business, and which tax is
creditable against the income tax payable of the seller.
 Expanded Withholding Tax
Under the tax rules, the following are the percentages to be withheld:
Seller Tax rate Threshold

The seller/transferor is habitually engaged in the

real estate business as per proof of registration .5% ₱500,000 and below
with the HLURB or the HUDCC or other
satisfactory evidence (for example, he/it Over ₱500,000 but not more
3.0%
consummated during the preceding year at least than ₱2,000,000
six taxable real estate transactions, regardless of
amount) 5.0% Over ₱2,000,000

The seller/transferor is not habitually engaged in

the real estate business (but the real estate sold 6.0% Any amount
is an ordinary asset)
The seller/transferor is exempt from creditable
withholding tax in accordance with Section Exempt Not applicable
2.57.5 of Revenue Regulations No. 2-98
 Income Tax
Corporation: 2% MCIT based on Gross Sales or 30% CIT
based on Net Income, whichever is higher.

Individual: Based on graduated tax rate at a maximum

rate of 35%
 Income Tax
All Licensed Brokers or Salespersons are subject to tax.
 Register your realty business with the BIR (COR)
 Your authority to withhold is stated in your COR.
Otherwise, you may not.
 Keep books of accounts for your transactions (renewal
done during December)
 Keep BIR authorized Official Receipts
 File the proper tax returns
 Donor’s Tax
Tax on a donation or gift (in this case real property) and is
imposed on the free transfer of property between two or
more persons (whether strangers or related) who are living at
the time of the transfer.

The donor’s tax for each calendar year is now at a uniform

rate of 6 percent under the Tax Reform for Acceleration and
Inclusion” (TRAIN) Law.
 Estate Tax
Estate Tax (or more colloquially known as Inheritance Tax)
is a tax imposed on the privilege of transferring a property
upon the death of the owner to the lawful heirs.
Tax is based on the Net Estate (Gross estate less allowable
deductions).
 Estate Tax To do List

1. File a Notice of Death with the BIR, RDO where the

decedent was domiciled, within two months after the date
of death. (Estate exceeds P20,000.00)
2. Get a TIN for the Estate of the deceased person
3. Prepare the list of assets and liabilities of the decedent.
Get the FMVs at the time of death.
4. Prepare the supporting documents for the assets and
liabilities, as well as the deductions:
• Certified true copy of the Death Certificate
• Notice of Death duly received by the BIR*
 Estate Tax To do List
• One of the following:
o Deed of Extra-Judicial Settlement of the Estate
o Court Orders/Decision, if the estate is settled judicially;
• Affidavit of Self-Adjudication and Sworn Declaration of all
properties of the Estate
• A certified true copy of the schedule of partition of the
estate and the order of the court approving the same, if
applicable.
• Certified true copy(ies) of the Title(s) of real property(ies)
• Certified true copy of the latest Tax Declaration of real
properties at the time of death, if applicable
 Estate Tax To do List
• “Certificate of No Improvement” issued by the Assessor’s
Office declared properties have no declared improvement
or Sworn Declaration/Affidavit of No Improvement by at
least one (1) of the transferees
• Certificate of Deposit/Investment/Indebtedness owned by
the decedent and the surviving spouse, if applicable
• Photocopy of Certificate of Registration of vehicles and
other proofs showing the correct value of the same, if
applicable
• Photo copy of certificate of stocks, if applicable
 Estate Tax To do List
• Proof of valuation of shares of stocks at the time of death,
if applicable
• For listed stocks – newspaper clippings or certification from the
Stock Exchange
• For unlisted stocks – latest audited Financial Statement of
issuing corporation with computation of book value per share
• Proof of valuation of other types of personal property, if
applicable
• Proof of claimed tax credit, if applicable
• CPA Statement (estate exceeds Php2M)
 Estate Tax To do List
• Certification of Barangay Captain for claimed Family Home
• Duly notarized Promissory Note for “Claims against the
Estate” arising from Contract of Loan
• Accounting of the proceeds of loan contracted within three
(3) years prior to death of the decedent
• Proof of the claimed “Property Previously Taxed”
• Proof of claimed “Transfer for Public Use”
• Copy of Tax Debit Memo used as payment, if applicable
5. Compute the net estate and estate tax then file the Estate
Tax Return within 6 months and pay the estate taxes.
 Deductions from Gross Estate
1. Expenses, Losses, Indebtedness, and Taxes (ELIT)
a. Funeral expenses – Lowest among:
Actual funeral expenses; 5% of the gross estate; and P200K.
b. Judicial expenses of the testamentary and intestate proceedings
c. Claims against the estate
At the time the indebtedness was incurred, the instrument
was duly notarized; and
If the loan was contracted within three (3) years before the
death of the decedent, the administrator or executor shall submit
a statement showing the disposition of the proceeds of the loan
 Deductions from Gross Estate
d. Claims of the deceased against insolvent persons
e. Unpaid mortgages, etc.
2. Property Previously Taxed (Vanishing deduction)
3. Transfers for Public Use
The amount of all bequests, legacies, devises or transfers to or
for the use of the Government of the Republic of the Philippines,
or any political subdivision thereof, for exclusively public
purposes.
4. Family Home
 FMV or P1M, whichever is lower.
 decedent’s family home as certified by the barangay captain
 Deductions from Gross Estate
5. Standard Deduction – P1 million (no substantiation needed)
6. Medical Expenses
 Medical expenses incurred by the decedent within (1) year
prior to his death which shall be duly substantiated with
receipts
 Maximum: P500,000.00
7. Amount received by heirs under RA 4917 (retirement benefits
of employees of private firms)
8. Share in the Conjugal Property
The net share of the surviving spouse in the conjugal
partnership property as diminished by the obligations properly
chargeable to such property.
 Estate Tax Table
The estate tax rates depend on the date of death. For
those who died on January 1, 1998 and onwards, the
following are the estate tax rates based on the net estate:
Effective January 1, 2018 to present [Republic Act (RA) No.
10963]
There shall be an imposed rate of six percent (6%) based
on the value of such NET ESTATE determined as of the time of
death of decedent composed of all properties, real or
personal, tangible or intangible less allowable deductions.
 Estate Tax Table
Effective January 1, 1998 up to December 31, 2017 (RA No.
8424)
The Tax Shall Of the Excess
Over But not Over Plus
be Over
P 200,000.00 Exempt
P 200,000.00 500,000.00 0 5% P 200,000.00
500,000.00 2,000,000.00 P 15,000.00 8% 500,000.00
2,000,000.00 5,000,000.00 135,000.00 11% 2,000,000.00
5,000,000.00 10,000,000.00 465,000.00 15% 5,000,000.00
10,000,000.00 1,215,000.00 20% 10,000,000.00
 ESTATE TAX SAMPLE COMPUTATION
Gross Estate 5,000,000
Less: Deductions from Gross Estate
1. Expenses, losses, indebtedness, taxes
a. Actual funeral expenses 300,000
or 5% of gross estate 250,000
whichever is lower but limited to 200,000 200,000
b. Judicial expenses of testementary or
intestate procedings 20,000
c. Claims vs. Estate - Loan must be duly
notarized and if loan contracted within
3 years before death, show disposition
of loan. 1,000,000
d. Clamis vs. insolvent persons (A/R
must be included in GE) 50,000
e. Unpaid mortgages 200,000
f. Income tax payable 5,000
g. Property tax payable 5,000
h. Losses on acct of fires, storms, etc. 20,000
i. Losses due to theft, robbery 10,000
 ESTATE TAX SAMPLE COMPUTATION
2. Transfer for public use - RP, LGU, Public Use
3. Bequests, devices, or transfers to
DSWD, Cultural or charitable institutions 10,000
4. Vanishing Deductions
Property Previously taxed (5yrs)
5. Family Home
Certified y Brgy. Capt; Php1M or
below; if conjugal less 50% 500,000
6. Medical expenses
Incurred within 1 year prior to death,
supported by receipts; max: 500K 500,000
7. Standard Deduction 1,000,000 3,520,000
Net Estate 1,480,000

January 1, 2018 onwards 6% 88,800

January 1, 1998 - December 31, 2017 500,000 150,000

980,000 8% 78,400
228,400
 Transfer Tax
Tax imposed on any mode of conveying the ownership of a
real property, either through sale, donation, barter, or any
other mode.
o Located in the province, tax must not exceed 50% of the
1% of the tax base.
o Located in Metro Manila or any cities in the Philippines, tax
must not exceed 75% of the 1% of the tax base.

Penalty of the failure to pay is 25% of the amount due plus

interest of 2% per month, not to exceed 72%.
 EXERCISE 4

Kate sold to Cristina (both naturalized Filipino citizens) in June 2018, a

residential lot for Php960K, exclusive of mortgage to be assumed by
Cristina amounting to Php100K. Cristina gave Kate a down payment
of Php100K. Both agreed that the balance will be paid in (8) equal
monthly installments beginning July 2018. Kate realized a profit of
25% of cost.

Compute the following:

1. Selling Price 4. Gross Profit
2. Contract Price 5. GP rate for tax purposes
3. Initial Payment made 6. Taxable Income for 2018 & 2019
 EXERCISE 4 ANSWER KEY

1. Selling Price 4. Gross Profit

Cash Payment 960K Selling Price 1.060M
Add: Assumed mortgage 100K Less: Acquisition Cost
Selling Price 1.060M (1.06M/125%) 848K
Gross Profit 212K
2. Contract Price
Selling Price 1.060M 5. GP rate for tax purposes
Less: Assumed mortgage 100K Gross Profit Php212K
Selling Price 960K Contract Price Php960K = 22.08%

3. Initial Payment made 6. Taxable Income for 2018 & 2019

Down Payment 160K 2018: 760K x 22.08% = Php167,808
Installments (Php100K x 6) 600K 2019: 200K x 22.08% = Php44,160
IP for taxable year 2018 760K
 EXERCISE 5
A 5 year old residential house with 350sqm floor area located in
General Santos City was sold by DimCap Real Estate for a total
contract price of P5M. The FVM of the land per tax declaration is
P1M ; however the zonal valuation is at P2,500/sqm. The FMV of the
building is P3M.

Compute the following:

1. Capital Gains Tax
2. Documentary Stamp Tax
3. Transfer Fee
 EXERCISE 5 ANSWER KEY

1. Capital Gains Tax

Total Consideration P5M
Zonal Valuation (1,000sqm @ P2,500) P2.5M
Add: Bldg value
a. Contract: P5M – 2.5M = P2.5M
b. FMV: P3M 3.0M P5.5M

CGT = Php5.5M @ 6% = Php330,000

2. Documentary Stamp Tax: Php5.5M @ 1.5% = Php82,500

3. Transfer Fee: ½ of 1% x Php5.5M = Php27,500
THANK YOU!