Capital Gains Tax, Documentary Stamp Tax, and Other Costs When Selling Philippine Property
Selling a property in the Philippines comes with costs beyond just the price. Taxes, fees, and other charges can add up fast. So, knowing what to expect helps you plan your sale well. This guide breaks down every key cost — from Capital Gains Tax to registration fees — in plain terms.
What Is Capital Gains Tax (CGT)?
Capital Gains Tax (CGT) is one of the biggest costs when you sell property. In the Philippines, it is a final tax of 6% on the highest of the gross selling price (GSP), the BIR zonal value and the assessor’s market value.
For example, if you sell a condo for PHP 3,000,000 but the BIR zonal value is PHP 3,500,000 and the assessor’s value is lower, the tax base is PHP 3,500,000. So your CGT would be PHP 210,000.
By law, the seller pays the CGT. However, a buyer can agree in the contract to take it on. Always check your deed of sale to see who pays what.
The deadline to pay CGT is 30 days from the date of the notarized deed of sale. Missing this deadline can result in penalties and surcharges.
Is There a CGT Exemption?
Yes, there is one key exemption. If the property is your main home (principal residence), you may not need to pay CGT. However, you must be a Filipino citizen or resident alien who actually lives in the property, and you must use the full sale proceeds to buy or build a new principal residence within 18 months.
You must also notify the BIR within 30 days of the sale, and the 6% tax is held in escrow until the BIR certifies that you have reinvested. If you reinvest only part of the proceeds, the rest is taxed in proportion. You can use this exemption only once every 10 years. Owners who do not live in the property, which includes most overseas owners, usually do not qualify.
What Is Documentary Stamp Tax (DST)?
Documentary Stamp Tax (DST) is a tax on the documents used to transfer ownership. The current rate under the TRAIN Law is 1.5% (PHP 15 for every PHP 1,000), charged on the same base as CGT: the highest of the GSP, the BIR zonal value and the assessor’s market value.
For example, if PHP 3,000,000 is the highest of those values, the DST would be PHP 45,000. This is paid to the Bureau of Internal Revenue (BIR). It is due by the 5th day of the month after the deed is notarized.
The law makes both parties to the deed liable for DST, so who pays it is negotiated. Whatever you agree on, put it in writing.
Transfer Tax
The Transfer Tax goes to the local government unit (LGU): it is paid to the city or provincial treasurer within 60 days of the deed. By law it is the seller’s duty unless the contract says otherwise, though deeds often assign it to the buyer. The legal ceiling is 0.5% for provinces and 0.75% for cities, applied to the higher of the selling price or the property’s market value.
Each local government sets its own rate within that limit, so confirm the current rate for Cebu City or any other city or province with its treasurer’s office before you budget. At the 0.75% city ceiling, the tax on a PHP 3,000,000 base would be at most PHP 22,500.
Registration Fee
The Registry of Deeds charges a fee to register the sale and issue the new title. The fee follows a graduated schedule set by law, based on the price stated in the deed, or the current assessed value if that is higher. Ask the Registry of Deeds for the current amount for your deed.
By law, the seller bears the cost of registering the sale unless the contract says otherwise, though deeds often assign it to the buyer. Agree who pays it, in writing, before you sign.
Broker’s Commission
If you use a licensed real estate broker, you will usually pay a commission. The fee is not fixed by law: it is whatever you agree in a written listing agreement, and it is normally paid by the seller from the sale proceeds. The agreement should also say whether the fee includes VAT. For land, the broker’s authority to sell must be in writing.
A licensed broker can help you price the property, find buyers and handle the paperwork. Before you sign, check the broker’s PRC license at verification.prc.gov.ph, by name or license number.
Notarial and Legal Fees
To pay the taxes and register the sale, the deed of sale must be notarized: the BIR and the Registry of Deeds both work from the notarized deed. Ask the notary public for the fee before the signing. By law, the cost of executing the sale falls on the seller unless the contract says otherwise.
If you hire a lawyer to handle the sale, agree the fee in writing first, since it depends on the size and complexity of the deal.
CGT vs. Creditable Withholding Tax (CWT)
Not all property sales are subject to CGT. If the property is an ordinary asset (for example, one held for sale by a dealer of real estate, used in a business or rented out), the sale is subject to Creditable Withholding Tax (CWT), and possibly VAT, instead of CGT. If you are selling as a company, different rules may apply as well.
For individual sellers whose property is not rented out, used in a business or held for sale, CGT at 6% applies. However, it is always best to confirm with a tax advisor before you sign any documents.
Sample Cost Breakdown for a PHP 3,000,000 Property Sale
Below is a sample breakdown of the costs involved in a PHP 3,000,000 property sale in the Philippines. It assumes PHP 3,000,000 is higher than both the BIR zonal value and the assessor’s market value. Note that actual amounts may vary based on the zonal value, location, and what is agreed in the contract.
| Cost Item | Rate | Estimated Amount | Who Pays |
|---|---|---|---|
| Capital Gains Tax (CGT) | 6% | PHP 180,000 | Seller |
| Documentary Stamp Tax (DST) | 1.5% | PHP 45,000 | As agreed by buyer and seller |
| Transfer Tax | Up to 0.5% in a province or 0.75% in a city | Up to PHP 15,000 in a province or PHP 22,500 in a city | Seller, unless the contract says otherwise |
| Registration Fee | Scaled by value | Ask the Registry of Deeds | Seller, unless the contract says otherwise |
| Notarial Fee | Ask the notary | Quote before signing | Seller, unless the contract says otherwise |
| Broker’s Commission | Agreed in writing | Set in your listing contract | Seller |
Who Pays What?
By law, the seller pays CGT, while both parties are liable for DST, so who pays the DST is negotiated. The Transfer Tax and the registration costs also fall on the seller by law unless the contract says otherwise, and deeds often assign them to the buyer. Always put the agreed terms in writing in the deed of sale.
In practice, some sellers offer to shoulder all taxes, while others pass all costs to the buyer. There is no single right answer. What matters is that both parties agree and sign off on the terms.
How to Reduce Your Tax Costs
There are a few ways to lower your tax burden when selling property in the Philippines.
First, know what the tax is based on. CGT is 6% of the selling price or the government’s value, whichever is higher, not of your profit, so spending on major repairs or upgrades does not reduce it. Keep your receipts anyway, as your tax advisor may ask for them.
Second, use the principal residence exemption if it applies to you. This can save you PHP 180,000 or more on a PHP 3,000,000 sale.
Third, know the BIR zonal value and the assessor’s market value of your property before pricing it. Pricing far below the zonal value will not help, as the BIR will still use the higher figure as the tax base.
Finally, work with a licensed broker and a good tax advisor. They can help you structure the deal in a way that is fair and compliant with BIR rules.
Frequently Asked Questions
Who pays the Capital Gains Tax — the buyer or the seller?
By law, the seller pays CGT. However, a buyer can agree in the contract to take it on. Whatever you agree on, write it clearly in the deed of sale to avoid disputes later.
Can I avoid Capital Gains Tax when selling my home?
Possibly, if the property is your principal residence and you meet the conditions. You must be a Filipino citizen or resident alien who lives in the property, and you must use the full sale proceeds to buy or build a new principal residence within 18 months. You can use this exemption only once every 10 years. You must also notify the BIR within 30 days of the sale, and the tax is held in escrow until the BIR certifies that you have reinvested.
How long does the title transfer take?
The total time depends on the BIR, the local treasurer and the Registry of Deeds. The BIR currently targets 3 working days for the tax computation sheet in a simple sale (7 in a complex one) and 7 working days for the eCAR once your documents and proof of payment are complete. The Registry of Deeds then registers the sale and issues the new title once it has the eCAR-stamped deed, the transfer-tax receipt and its other required documents. Delays can happen due to BIR or LGU processing times. Having all your documents ready from the start can speed things up.
What is the BIR zonal value?
The BIR zonal value is a government value for property in a given area, set by the Bureau of Internal Revenue before the 2024 valuation reform. It is used as the tax base if it is higher than your selling price and the assessor’s market value. Under the Real Property Valuation and Assessment Reform Act (RA 12001), existing zonal values stay in force until a new schedule of market values for the area is approved by the Department of Finance. To confirm which value applies to your property, ask the BIR Revenue District Office that covers it.
Do I need a broker to sell my property?
It is your choice. A licensed real estate broker can help you price your property well, find buyers, and handle the paperwork. If you hire one, agree the fee in a written listing agreement and check the broker’s PRC license at verification.prc.gov.ph before you sign.
What happens if I miss the CGT payment deadline?
If you miss the 30-day deadline, the BIR will charge penalties and surcharges on top of the tax due. The surcharge is 25% of the unpaid tax. Interest is also charged at double the legal interest rate set by the Bangko Sentral ng Pilipinas, and a compromise penalty may be added. So it is best to pay on time to avoid extra costs.
General information, current to October 2026, and not legal or tax advice. Rules and local rates change, so confirm figures with the BIR, the local treasurer and your lawyer before you sign.
