As i have said before in a previous post CGT capital gain tax is another phrase from the English language that has been hijacked by filipino's and is used completely wrong.
It is actually a tax 6% on the selling price, you could sell at a lower price than you bought the property for hence no gain and yet you still have to pay this nonsense.
Also be aware of zonal value, CGT is charged on whichever is the higher, the selling price or the zonal value.
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Generally the seller will decide & agree the "taxable" value of the land/property. This is mostly due to the fact that the seller hasn't paid the taxes in full since he/she bought the land and is therefore "owed" to the government. The land tax currently runs at 1% (provinces) of the value per annum (2% for cities). Also the CGT on the sale runs at 6% so if the buyer grees to the lower "value" with the seller then the seller has a lower debt and, in general, the buyer's lawyer fees could also be lower as these are also often a percentage of the property value. Everyone saves and the government miss out.
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I read of a Court case between two people arguing over a land deal and it was shown that the declared sale price was not the same as the declared value (i.e. under valuing). The Court stated they were bound to inform the BIR of the facts.
If this is ever tightened up on then the costs of property transfers will be astronomical because of the fact, as my Learned Friend Mr. C. Brown, Esq. often points out, CGT is NOT CGT at all but a Land Transfer Tax.
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