When you sell a house, lot, or condo in the Philippines, the price you agree on with your buyer is not what you walk away with. The Bureau of Internal Revenue (BIR) and your local government unit (LGU) collect several taxes on the transfer, and the property cannot legally change hands until they are paid. This guide breaks down every tax and fee for 2026, who is responsible for each, how they are computed, and the deadlines that protect you from penalties.
What taxes do you pay when selling property in the Philippines?
Selling real property classified as a capital asset triggers three core taxes plus registration fees: a 6% capital gains tax (CGT), a 1.5% documentary stamp tax (DST), and a local transfer tax of up to 0.5% (provinces) to up to 0.75% (cities and municipalities within Metro Manila), followed by Registry of Deeds registration fees of roughly 0.25%-0.5%. All three taxes are computed on the same base: the highest of the gross selling price, the BIR zonal value, or the provincial/city assessor's fair market value (FMV).
| Tax / Fee | Rate | BIR Form / Authority | Who usually pays | Deadline |
|---|---|---|---|---|
| Capital Gains Tax (CGT) | 6% | BIR Form 1706 | Seller | 30 days after notarization |
| Documentary Stamp Tax (DST) | 1.5% (₱15 per ₱1,000) | BIR Form 2000-OT | Buyer | 5th day of the month following notarization |
| Local Transfer Tax | up to 0.5% province / up to 0.75% Metro Manila | LGU Treasurer (LGC Sec. 135) | Buyer (statutory liability is the seller/transferor; commonly negotiated to buyer) | 60 days from execution of deed |
| Registration Fee | ~0.25%-0.5% (sliding scale) | Registry of Deeds | Buyer | On title transfer |
How is capital gains tax computed when selling property?
Capital gains tax is 6% of the highest among the selling price, zonal value, or assessor's FMV, and it is a final tax paid by the seller using BIR Form 1706. "Capital gains" here is a misnomer: the BIR does not look at your actual profit. Even if you sell at a loss, you still pay 6% of the gross value. This is why the tax base is the higher of three values, not your cost minus proceeds.
Example: Maria Santos sells her townhouse in Quezon City for ₱5,000,000. The BIR zonal value of the lot plus the assessor's FMV of the improvement total ₱5,400,000. Because ₱5,400,000 is higher than the ₱5,000,000 price, CGT is computed on ₱5,400,000: ₱5,400,000 × 6% = ₱324,000. Maria must file BIR Form 1706 and pay within 30 days of notarizing the Deed of Absolute Sale, at the Revenue District Office (RDO) where the property is located. For a faster estimate, run the numbers through our capital gains tax calculator, then read the full breakdown on our capital gains tax explainer.
How is documentary stamp tax on a deed of sale computed?
Documentary stamp tax is ₱15 for every ₱1,000 (or fraction thereof) of the higher of the selling price or FMV, an effective rate of 1.5%, filed on BIR Form 2000-OT. DST is a tax on the document evidencing the transfer, not on the gain. Using Maria's ₱5,400,000 base: ₱5,400,000 × 1.5% = ₱81,000. The DST return is due on or before the 5th day of the month following the month the deed was notarized, which makes it one of the earliest recurring BIR deadlines. Estimate it instantly with our documentary stamp tax calculator or learn the rules on our DST guide.
What is the local transfer tax and registration fee?
The local transfer tax is imposed by the LGU under Section 135 of the Local Government Code at up to 0.5% for provinces and up to 0.75% for cities and municipalities within Metro Manila (per Republic Act No. 9640). It is paid at the Provincial or City Treasurer's office, typically within 60 days of executing the deed, and a Tax Clearance is required before the Registry of Deeds will register the transfer. For Maria's Quezon City property at 0.75%: ₱5,400,000 × 0.75% = ₱40,500. The Registry of Deeds then charges a registration fee on a sliding scale of roughly 0.25%-0.5% of the value, here about ₱27,000. Note that the seller separately pays any unpaid real property tax (amilyar) up to the date of sale before a tax clearance is issued.
Who pays which tax: seller vs. buyer?
By default the seller pays the CGT, and the buyer pays the DST, transfer tax, and registration fees, but these allocations are negotiable and should be written into the Deed of Sale. The CGT is legally the seller's liability because it taxes the seller's presumed gain. In practice, BIR Form 1706 is filed jointly, and many buyers withhold the 6% from the price and remit it to protect their title transfer. DST, transfer tax, and registration are customarily the buyer's because the buyer benefits from registering clean title. Spell out the split clearly in writing, as the BIR will not honor verbal agreements when computing penalties.
Worked example: total cost of selling a ₱5.4M property
Putting Maria Santos's Quezon City sale together, here is the full tax stack on a ₱5,400,000 tax base:
- Capital gains tax (seller): ₱5,400,000 × 6% = ₱324,000
- Documentary stamp tax (buyer): ₱5,400,000 × 1.5% = ₱81,000
- Transfer tax, Metro Manila (buyer): ₱5,400,000 × 0.75% = ₱40,500
- Registration fee (buyer): ~₱27,000
- Total taxes and fees: ≈ ₱472,500
Maria's out-of-pocket tax burden as seller is ₱324,000 (CGT), while her buyer Juan dela Cruz shoulders about ₱148,500 in DST, transfer tax, and registration. Together, taxes and fees equal roughly 8.75% of the property value. A provincial sale would be slightly cheaper because transfer tax caps at 0.5% instead of 0.75%. For a detailed seller-specific walkthrough, see our real estate sellers tax guide.
Common mistakes that cost sellers money
The biggest avoidable cost is missing the 30-day CGT deadline. Late filing triggers a 25% surcharge (50% for willful neglect), interest at double the legal rate per year, and a compromise penalty, so a ₱324,000 CGT can balloon by tens of thousands within weeks. Other frequent errors:
- Computing tax on the contract price only. The BIR recomputes on zonal/FMV. If the zonal value is higher, you owe the difference plus penalties.
- Forgetting the Certificate Authorizing Registration (CAR). The BIR issues the CAR only after CGT and DST are paid; without it, the Registry of Deeds cannot transfer title.
- Treating an ordinary asset as a capital asset. Property used in trade or business (e.g., a developer's inventory) is subject to creditable withholding tax and 12% VAT, not the 6% CGT.
- Ignoring unpaid amilyar. Outstanding real property tax blocks the LGU tax clearance.
Can you avoid capital gains tax legally? (Principal residence exemption)
Yes. Under BIR Revenue Regulations No. 13-99, the sale of your principal residence can be fully exempt from the 6% CGT if you reinvest the entire proceeds in a new principal residence within 18 months. The exemption is available once every 10 years, and you must notify the BIR of your intent within 30 days of the sale by filing a Sworn Declaration along with BIR Form 1706. If you use only part of the proceeds, the unutilized portion becomes taxable at 6% plus penalties. This is the single most valuable strategy for homeowners trading up. To compare the impact on different taxpayer situations, see our income tax overview and the related property inheritors tax guide if the property came through inheritance.
Step-by-step: how to pay your property sale taxes
After notarizing the Deed of Absolute Sale, gather the deed, owner's title (TCT/CCT), latest tax declaration, and BIR-certified zonal valuation. File and pay CGT (Form 1706) and DST (Form 2000-OT) at the RDO/Authorized Agent Bank where the property is located, secure the CAR, pay the transfer tax at the LGU Treasurer with a tax clearance, then register the sale and new title at the Registry of Deeds. Estimating each tax beforehand with our CGT and DST calculators prevents underpayment surprises at the bank.
Sources and References
The rates, thresholds, and rules on this page are drawn from official Philippine government issuances and reputable tax references. Tax rules change; always confirm current figures with the relevant agency before acting.
- BIR Revenue Regulations No. 13-99 - Exemption of Certain Individuals from the Capital Gains Tax on the Sale of a Principal Residence — Supreme Court E-Library
- Guidelines and Instructions for BIR Form No. 1706 (Capital Gains Tax Return) — Bureau of Internal Revenue
- Documentary Stamp Tax — Bureau of Internal Revenue
- Revenue Regulations No. 21-2018 - Implementing Section 249 (Interest) of the NIRC as amended by the TRAIN Law — Bureau of Internal Revenue
- Transfer Tax in the Philippines (LGC Sec. 135, RA 9640) — Respicio & Co. Law Firm