What is Capital Gains Tax (CGT)? It is a final tax assessed on the presumed gain derived by citizens and resident aliens, as well as estates and trusts, from the sale or exchange of real property. (Section 24(d) of the National Internal Revenue Code of 1997)
Who and what are liable?
- Natural persons or individuals
- Citizens
- Resident aliens
- Estates
- Trusts
- Sale, exchange, or other disposition of real property
- Pacto de retro sales
- Conditional sales
What is the exception?
If the proceeds are used to construct or acquire a new principal residence within 18 months.
Where shall the 6% be charged?
Gross selling price or current fair market value, whichever is higher.
Are corporations liable for CGT? No.
They are liable for ordinary income tax included in Corporation’s return, but still 6%. (VILE vs. CA)
Capital Gains Tax on Corporations (Chapter IV, Section 27 of 1997 NIRC) – Capital Gains from the sale of lands or buildings: Final tax of 6% on the gain from properties not used as a business, but are treated as capital assets, based on gross selling price or fair market value (determined based on Section 6(e) of 1997 NIRC) whichever is higher. The gains from the sale should be included in a corporation’s return (Income Tax Return) pursuant to Sections 24(a) and 45 of 1997 NIRC.