BIR Form 1706 is used for an onerous transfer of Philippine real property classified as a capital asset. The BIR says it is filed within 30 days following the sale, exchange, or disposition, subject to the applicable rules. This guide explains the form's purpose, who should use it, what information is normally required, and how to verify the current BIR version before filing.
This page is an educational filing guide, not a substitute for the current form, BIR instructions, or professional advice. Tax treatment can depend on the taxpayer, transaction, tax period, and current BIR issuances.
Purpose and legal context
The BIR describes Form 1706 as the Capital Gains Tax Return for an onerous transfer of real property classified as a capital asset, whether taxable or exempt. It is used in connection with securing the tax clearance needed to transfer ownership.
Classification matters. Property that is not a capital asset, a gratuitous transfer, or a transaction outside the form's stated scope may require a different treatment. Confirm the classification before computing tax.
Who should use or receive this form
The BIR instructions refer to the buyer/transferee and seller/transferor. The parties should coordinate the return, supporting documents, payment, and transfer-clearance process.
When to file, issue, or complete it
The BIR states that the return is filed within 30 days following each sale, exchange, or disposition. For installment sales, the timing can run from the first down payment and each subsequent installment under the applicable instructions.
How to complete the main fields
- Enter the parties' TINs, names, addresses, and transaction details.
- Describe the property and the transfer document.
- Determine the applicable tax base using the current BIR instructions.
- Complete the tax computation, credits, payments, and penalties sections.
- Sign and submit the required copies with the supporting documents.
Common errors to avoid
- Using Form 1706 for property that is an ordinary asset.
- Using the sale price without checking the applicable valuation rules.
- Missing the transfer document or TIN information.
- Assuming an exempt transaction needs no return when the BIR instructions require filing.
What to keep with your records
Keep the notarised deed or transfer document, TIN records, proof of acquisition and allowable costs where applicable, valuation documents, payment proof, and the validated return.
Penalties and verification
Late filing or payment may trigger surcharge, interest, and compromise penalties under the Tax Code. Have the amount checked against the current BIR rules rather than relying on an old calculator.
Related BIR forms
Form 1706 is distinct from Form 1606 for certain ordinary-asset transfers and Form 1707 for shares of stock not traded through the local stock exchange.