Capital Gains Tax (2026 Guide)
Tax on disposing of real property (flat 6%) and unlisted shares (flat 15% of net capital gain) under the NIRC.
The Definition
Capital Gains Tax (CGT) is a tax imposed on the profit realized from the sale, exchange, or other disposition of capital assets in the Philippines. Under the National Internal Revenue Code (NIRC), CGT applies primarily to the sale of real property and unlisted shares of stock. The tax base and rate depend on the type of asset. For real property classified as a capital asset, the rate is a flat 6% applied to the HIGHER of the gross selling price or the fair market value/BIR zonal value. For shares of stock of a domestic corporation that are NOT traded through a stock exchange, the rate is a flat 15% of the net capital gain (selling price minus cost basis), with no holding-period tiers. Shares sold THROUGH the Philippine Stock Exchange are not subject to CGT; instead they are subject to a 0.1% stock transaction tax on the gross selling price under NIRC § 127. The legal basis is NIRC §§ 24(C), 24(D), and 127, as amended by the Tax Reform for Acceleration and Inclusion (TRAIN) Law (RA 10963) and the Capital Markets Efficiency Promotion Act (CMEPA, RA 12214, effective July 1, 2025).
Who Pays This Tax
Capital Gains Tax is paid by any individual or corporation that sells, exchanges, or disposes of capital assets in the Philippines. This includes:
- Individuals: Filipino citizens and foreign nationals who sell real property located in the Philippines or securities issued by Philippine corporations or the Philippine government.
- Corporations: Domestic and foreign corporations that dispose of capital assets, including real property and securities.
- Partnerships and Trusts: Entities that realize gains from asset disposition.
However, certain transactions are exempt, such as sales by the government, sales of personal residences under specific conditions (NIRC § 24(D)), and transfers between spouses or to heirs (NIRC § 24(C)).
How It's Calculated
Capital Gains Tax calculation depends on the type of asset:
Real Property (Land and Buildings)
Formula: CGT = Tax Base × 6%, where the tax base is the HIGHER of the gross selling price or the fair market value / BIR zonal value.
For real property held as a capital asset, the tax is a flat 6% (not based on net gain or cost) under NIRC § 24(D)(1) and RR 7-2003. There is no separate 5% agricultural-land rate and no holding-period tiers; the 6% rate is uniform across residential, commercial, industrial, and agricultural capital assets. Cost basis and improvements are irrelevant for the 6% final CGT (they matter only if the property is an ordinary asset taxed under regular income tax).
Example: Maria sells a residential lot in Quezon City for ₱5,000,000, where the BIR zonal value is ₱4,500,000. The tax base is the higher figure, ₱5,000,000. CGT = ₱5,000,000 × 6% = ₱300,000.
Unlisted Shares of Stock
Formula: CGT = Net Capital Gain × 15% (where Net Capital Gain = Selling Price − Cost Basis)
For shares of stock of a domestic corporation that are NOT traded through a stock exchange, the tax is a flat 15% of the net capital gain under NIRC § 24(C) as amended by the TRAIN Law (RA 10963) and harmonised by CMEPA (RA 12214). There are no holding-period tiers — the 15% rate applies whether the shares were held for one month or ten years.
Example: Juan bought 1,000 unlisted shares of ABC Corporation at ₱100 per share (cost basis = ₱100,000) and sold them after 18 months at ₱150 per share (selling price = ₱150,000). Net Capital Gain = ₱150,000 − ₱100,000 = ₱50,000. CGT = ₱50,000 × 15% = ₱7,500.
Listed Shares (Traded Through the Stock Exchange)
Shares sold THROUGH the Philippine Stock Exchange are NOT subject to capital gains tax. Instead they are subject to a stock transaction tax of 0.1% of the gross selling price under NIRC § 127 (reduced from 0.6% to 0.1% by CMEPA / RA 12214, effective July 1, 2025), withheld and remitted by the broker.
Special Cases
Sale of Personal Residence (NIRC § 24(D)): Individuals may exclude up to ₱10,000,000 of gain from the sale of a personal residence if the property is used as a principal residence for at least 5 of the last 8 years before sale. The exclusion applies once every 10 years. Gains exceeding ₱10,000,000 are taxed at 6%.
Example: Rosa sells her family home in Manila for ₱15,000,000, having lived there for 10 years. Her cost basis was ₱5,000,000. Gain = ₱10,000,000. Excluded gain = ₱10,000,000 (up to the limit). Taxable gain = ₱0. No CGT is due.
Filing Requirements
Capital Gains Tax must be reported and paid according to the following requirements under NIRC § 24 and BIR Regulations:
For Real Property
- Form BIR 1706: Capital Gains Tax Return for the onerous transfer of real property classified as a capital asset, filed with the Bureau of Internal Revenue (BIR) through the Electronic Filing and Payment System (eFPS), eBIRForms, or at the taxpayer's Regional District Office (RDO).
- Deadline: Within 30 days from the date of sale. CGT may be paid at the time of filing the BIR 1706 or, for installment sales, within 30 days of each installment payment.
For Unlisted Shares of Stock
- Form BIR 1707: Capital Gains Tax Return for the onerous transfer of shares of stock not traded through the local stock exchange, filed within 30 days from each sale or disposition.
- Form BIR 1707-A: Annual Capital Gains Tax Return that reconciles all share transactions for the year — due on or before April 15 for individuals, and on or before the 15th day of the 4th month after the close of the taxable year for corporations.
Documentary Requirements
- Deed of Sale or Certificate of Sale.
- Tax Declaration (TD) or Real Property Tax Certificate (RPTC) showing the property description and assessed value.
- Proof of payment of real property transfer tax (if applicable).
- For securities: broker's statement, stock certificate, or evidence of purchase and sale.
- Proof of identity and Tax Identification Number (TIN).
Exemptions & Special Cases
The following transactions are exempt from Capital Gains Tax under NIRC § 24(C) and § 24(D):
- Government Transfers: Sales or transfers by the national government, local government units, or government-owned corporations.
- Transfers Between Spouses: Transfers of property between spouses during marriage (NIRC § 24(C)).
- Transfers to Heirs: Transfers of property to heirs or legatees by will or succession (NIRC § 24(C)).
- Sale of Personal Residence: Up to ₱10,000,000 of gain from the sale of a principal residence, once every 10 years (NIRC § 24(D)).
- Transfers to Charitable Institutions: Transfers to duly registered charitable, educational, or religious institutions (subject to BIR approval).
- Involuntary Conversions: Gains from insurance proceeds or condemnation awards may qualify for deferral if reinvested in similar property within specified periods.
Penalties for Non-Compliance
Failure to file the Capital Gains Tax return or pay the tax on time results in penalties under NIRC §§ 248 and 249, as amended by TRAIN and CREATE:
- Surcharge: 25% of the unpaid tax (NIRC § 248).
- Interest: 12% per annum on the unpaid tax, compounded monthly (NIRC § 249, as amended by RA 10963).
- Fraud Penalty: 75% of the unpaid tax if the non-compliance is deemed fraudulent (NIRC § 248).
- Criminal Penalties: Imprisonment of 2 to 4 years and/or fine of ₱5,000 to ₱1,000,000 for tax evasion (NIRC § 254).
Example: If a taxpayer fails to pay ₱100,000 in CGT on time, the surcharge is ₱25,000 (25% × ₱100,000), and interest accrues at 12% per annum on the unpaid amount.
BIR Form 1706 (Capital Gains Tax Return for Real Property) for real property sales; BIR Form 1707 (per transaction) and BIR Form 1707-A (annual) for unlisted-share gains
Within 30 days of sale for real property (Form 1706); within 30 days of each sale for unlisted shares (Form 1707), reconciled on Form 1707-A by April 15 of the following year
Need a Calculation?
Use our BIR-compliant calculator to compute your capital gains tax instantly.
Who Pays Capital Gains Tax?
check_circleMandatory for:
Any individual or entity that sells, exchanges, or otherwise disposes of capital assets located in the Philippines — including Filipino citizens, resident and non-resident aliens, and domestic and foreign corporations — that dispose of real property (6% on the higher of gross selling price or fair market value/zonal value) or of unlisted shares (15% of net capital gain), per NIRC § 24(C)-(D) and § 27(D).
infoVoluntary for:
Sellers of a principal residence may elect the NIRC § 24(D)(2) exemption by depositing the proceeds in escrow and reinvesting in a new principal residence within 18 months.
cancelExempt:
Sales by the government; qualifying sales of a principal residence under NIRC § 24(D)(2); transfers exempt under donor's/estate tax rules; and dispositions of shares listed and traded on the PSE (subject instead to the stock transaction tax).
Worked Examples
Maria sells a residential condominium in Makati for ₱8,000,000 (cost basis ₱6,000,000).
Computation
Gross Selling Price = ₱8,000,000 CGT Rate for Real Property = 6% CGT = ₱8,000,000 × 6% = ₱480,000
Result
Maria owes ₱480,000 in CGT. She files BIR Form 1706 within 30 days of sale and pays the tax at her RDO or through eFPS.
Juan buys 5,000 unlisted shares of a family-owned domestic corporation at ₱80 per share (cost ₱400,000) and sells them 14 months later at ₱120 per share (selling price ₱600,000). The shares are not traded through any stock exchange.
Computation
Selling Price = ₱600,000 Cost Basis = ₱400,000 Net Capital Gain = ₱600,000 − ₱400,000 = ₱200,000 CGT Rate (unlisted shares, NIRC § 24(C)) = 15% (flat, no holding-period tiers) CGT = ₱200,000 × 15% = ₱30,000
Result
Juan owes ₱30,000 in CGT. He files BIR Form 1707 within 30 days of the sale and reconciles the transaction on the annual Form 1707-A by April 15 of the following year.
Rosa sells her family home in Quezon City for ₱12,000,000 (cost basis ₱2,000,000). She has lived there for 8 years.
Computation
Selling Price = ₱12,000,000 Cost Basis = ₱2,000,000 Gain = ₱12,000,000 − ₱2,000,000 = ₱10,000,000 Exclusion for Personal Residence (NIRC § 24(D)) = ₱10,000,000 (once every 10 years) Taxable Gain = ₱10,000,000 − ₱10,000,000 = ₱0 CGT = ₱0 × 6% = ₱0
Result
Rosa owes no CGT because her gain is fully covered by the ₱10,000,000 personal residence exclusion. She still files BIR Form 1706 to document the exemption.
ABC Corporation sells a commercial building in Cebu for ₱50,000,000 (cost basis ₱30,000,000).
Computation
Gross Selling Price = ₱50,000,000 CGT Rate for Real Property (Corporate) = 6% CGT = ₱50,000,000 × 6% = ₱3,000,000
Result
ABC Corporation owes ₱3,000,000 in CGT. The 6% CGT is a final tax filed on BIR Form 1706 within 30 days of the sale; it is not reported again on the corporate income tax return.
Pedro sells PSE-listed shares of Ayala Corporation through his broker for a gross selling price of ₱750,000 (his cost was ₱500,000).
Computation
Gross Selling Price = ₱750,000 Because the shares are traded THROUGH the local stock exchange, no capital gains tax applies. Instead, a stock transaction tax under NIRC § 127 applies to the gross selling price (regardless of gain or loss). Stock Transaction Tax Rate = 0.1% (NIRC § 127, as reduced by CMEPA/RA 12214 effective July 1, 2025) Stock Transaction Tax = ₱750,000 × 0.1% = ₱750
Result
Pedro pays no CGT on these listed shares. The broker withholds and remits the ₱750 stock transaction tax, so Pedro has no separate CGT return to file for this sale.
Common Mistakes to Avoid
errorComputing real-property CGT on net gain (selling price minus cost), or on the gross selling price alone when the BIR zonal value is higher.
Penalty: Underpayment of CGT; if discovered, the taxpayer faces a 25% surcharge plus 12% annual interest on the unpaid amount, plus potential fraud penalties.
How to Avoid: Apply the flat 6% to the HIGHER of the gross selling price or the fair market value/BIR zonal value under NIRC § 24(D)(1) and RR 7-2003. Cost and improvements do not reduce the base for the 6% final CGT. Check the zonal value on the BIR website before computing.
errorFailing to file BIR Form 1706 within 30 days of selling real property, assuming the annual ITR filing is sufficient.
Penalty: Late filing penalties, interest accrual, and potential criminal prosecution for tax evasion if the delay is prolonged.
How to Avoid: File BIR Form 1706 within 30 days of the sale date, regardless of when the annual ITR is due. Keep a copy of the Deed of Sale and proof of filing.
errorApplying holding-period tiers (e.g. 37.5%, 20%, or 5%) to capital gains on shares, or treating PSE-listed shares as subject to CGT.
Penalty: Overpayment of tax (if the assumed rate is too high) or underpayment (if too low), leading to interest and penalties, and incorrect returns that can trigger an audit.
How to Avoid: There are no holding-period tiers. Unlisted shares of a domestic corporation are taxed at a flat 15% of net capital gain under NIRC § 24(C), regardless of how long they were held. Shares sold through the stock exchange are not subject to CGT at all — only the 0.1% stock transaction tax under NIRC § 127.
errorClaiming the ₱10,000,000 personal residence exclusion more than once in a 10-year period.
Penalty: Disallowance of the excess exclusion, resulting in CGT on the full gain; plus interest and potential fraud penalties if the error is deemed intentional.
How to Avoid: Maintain records of all personal residence sales and the dates they occurred. The exclusion applies only once every 10 years per NIRC § 24(D). Consult a tax professional if selling multiple residences.
errorOverstating or failing to substantiate the cost basis of unlisted shares, leading to an incorrect net-gain calculation.
Penalty: Underpayment of CGT if the cost basis is overstated; interest and surcharge penalties apply.
How to Avoid: Maintain detailed records of the original purchase price and acquisition costs (such as broker's commissions and documentary stamp tax on the original issue). For unlisted shares the cost basis is the purchase price plus acquisition costs. Consult a CPA for complex adjustments.
Tax Optimization Strategies
lightbulbWhere you have a choice of market, selling shares THROUGH the Philippine Stock Exchange replaces the 15% CGT on net gain with a 0.1% stock transaction tax on gross selling price — often far cheaper when the gain is substantial.
Potential Savings: On a ₱1,000,000 net gain from a ₱1,200,000 sale, unlisted-share CGT would be ₱150,000 (15%), whereas the same shares sold listed on the PSE incur only ₱1,200 stock transaction tax (0.1% × ₱1,200,000).
lightbulbUtilize the ₱10,000,000 personal residence exclusion if you own multiple properties. Designate your principal residence strategically to maximize the exclusion, and plan the timing of sales to stay within the once-per-10-years limit.
Potential Savings: On a ₱10,000,000 gain from a personal residence sale, the exclusion saves ₱600,000 in CGT (6% × ₱10,000,000) compared to a non-qualifying property.
lightbulbKeep complete cost-basis records for unlisted shares — original purchase price plus documented acquisition costs reduce the net capital gain, which is the base for the flat 15% CGT. (There is no rate advantage from holding longer; the 15% rate is fixed regardless of holding period.)
Potential Savings: On shares sold for ₱1,000,000, substantiating an additional ₱200,000 of cost basis lowers the net gain by ₱200,000 and the CGT by ₱30,000 (15% × ₱200,000).
lightbulbFor real property sales, explore exemptions such as transfers to spouses or heirs (NIRC § 24(C)), which are not subject to CGT. If applicable, structure the transaction to qualify for the exemption.
Potential Savings: A transfer to a spouse or heir avoids CGT entirely. On a ₱5,000,000 property sale, this saves ₱300,000 (6% × ₱5,000,000) in tax.
lightbulbMaintain detailed records of the cost basis and acquisition cost for all unlisted shares. Accurate documentation supports a correct net-gain computation and helps defend against BIR audits.
Potential Savings: Proper documentation can prevent disputes that result in penalties and interest. On a ₱500,000 underpayment, avoiding a 25% surcharge saves ₱125,000.
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Glossary Terms
Frequently Asked Questions
Capital Gains Tax (CGT) is a specific final tax on the disposition of capital assets such as real property and unlisted shares, charged at fixed rates under NIRC § 24 (6% on real property, 15% on the net gain from unlisted shares). Income tax, on the other hand, is a progressive tax on all income, including business income and compensation. CGT is separate from income tax — real-property CGT is filed on Form 1706 and unlisted-share CGT on Form 1707/1707-A, not on the income-tax return. Corporations pay CGT on capital gains in addition to corporate income tax.
No. CGT is computed only on gains (profits). If you sell a property for less than your cost basis, you have a capital loss, not a gain. Capital losses cannot be used to offset other income under Philippine tax law, but they can be carried forward to offset future capital gains in subsequent years (subject to BIR regulations). You are not required to file a CGT return if there is no gain.
No. Capital gains tax on unlisted shares of a domestic corporation is a flat 15% of the net capital gain under NIRC § 24(C), regardless of how long the shares were held — there are no short-term or long-term tiers. Holding period is irrelevant to the rate. Shares sold through the Philippine Stock Exchange are not subject to CGT at all; they instead bear a 0.1% stock transaction tax on the gross selling price under NIRC § 127 (as amended by CMEPA/RA 12214, effective July 1, 2025).
No. The ₱10,000,000 personal residence exclusion under NIRC § 24(D) applies only to gains (profits). If you sell your home at a loss, there is no gain to exclude, and no CGT is due. The exclusion is designed to provide relief for homeowners who realize significant gains from the sale of their principal residence.
To file BIR Form 1706 (Capital Gains Tax Return for Real Property), you need: (1) the original Deed of Sale or Certificate of Sale; (2) the Tax Declaration (TD) or Real Property Tax Certificate (RPTC) showing the property description and assessed value; (3) proof of payment of real property transfer tax (if applicable); (4) proof of identity and TIN; and (5) any supporting documents showing the cost basis or acquisition price. Submit these documents to your Regional District Office (RDO) or file electronically through eFPS.
CGT on unlisted shares is due per transaction. You file BIR Form 1707 (Capital Gains Tax Return for shares not traded through the local stock exchange) and pay the 15% tax within 30 days of each sale or disposition. All of the year's share transactions are then reconciled on the annual BIR Form 1707-A, which individuals file on or before April 15 of the following year. It is not reported on the income-tax return. Shares sold through the stock exchange require no CGT return at all — the broker withholds and remits the 0.1% stock transaction tax.
Corporations are generally subject to CGT on the sale of capital-asset real property and unlisted shares at the same rates as individuals (6% on real property, 15% on the net gain from unlisted shares; no holding-period tiers). However, certain exemptions may apply, such as transfers to the government or to duly registered charitable institutions (subject to BIR approval). Additionally, corporations may qualify for special tax incentives under the CREATE Law (RA 11534) or other investment promotion laws, which could provide relief from CGT. Consult a tax professional to determine if your corporation qualifies for any exemptions or incentives.
Failure to report a capital gain is considered tax evasion under NIRC § 254. Penalties include a 25% surcharge on the unpaid tax (NIRC § 248), interest at 12% per annum compounded monthly (NIRC § 249), and potential criminal prosecution resulting in imprisonment of 2 to 4 years and/or a fine of ₱5,000 to ₱1,000,000. The BIR may also conduct an audit and assess additional taxes. It is critical to report all capital gains accurately and on time to avoid these severe penalties.
Sources & References (5)
Primary sources and the laws, regulations, and official issuances this page relies on. Each citation links directly to the issuing authority’s document.
- LawPhil Project (Arellano Law Foundation). “NIRC Section 24(C)/(D) as amended by RA 10963 (TRAIN) — 15% flat CGT on unlisted shares; 6% on real property.” lawphil.net. Republic Act No. 10963 (TRAIN), amending NIRC Sec. 24, full enacted text. Accessed .
- LawPhil Project (Arellano Law Foundation). “National Internal Revenue Code (RA 8424) — capital gains tax provisions.” lawphil.net. NIRC of 1997 (RA 8424), Title II, Chapter III. Accessed .
- Bureau of Internal Revenue. “BIR — Capital Gains Tax (rates, forms 1706/1707, 30-day filing).” bir.gov.ph. Bureau of Internal Revenue, Capital Gains Tax information page. Accessed .
- LawPhil Project (Arellano Law Foundation). “RA 12214 (CMEPA) — capital markets / stock transaction tax reform, 2025.” lawphil.net. Republic Act No. 12214 (CMEPA), full enacted text. Accessed .
Last Updated: June 13, 2026