Hi all...I have a question regarding capital gains tax in the Philippines. When we bought our land, the seller wanted us as the purchaser to pay their capital gains tax and could not understand my reluctance or why they should pay it....after much explaining that they the seller are the ones gaining capital the tax is designed for them....finally they got it with much reluctance... Anyway we bought the land and proceeded to build a house on it. We are now in a position where we may want to sell due to change of circumstances. The capital gains tax is a rather bitter pill to swallow and can’t really understand the reasoning if the property is your sole residence, as in the U.K. you do not pay tax on a property sale if you live in it. If I understand correctly the capital gains tax does not apply if the house or building is used for commercial purposes which includes rental and classed as an ordinary asset hence not requiring capital gain tax upon sale. See rule below In the case of taxpayer not engaged in the real estate business, real properties, whether land, building, or other improvements, which are used or being used or have been previously used in trade or business of the taxpayer shall be considered as ordinary assets. [Sec. 3(b) of RR No. 7-2003] At present we are not living in the property and back in the U.K. but have a family member living there paying a small monthly rent. If this is the case could we class the property as a rental and if we sold it as such could we avoid the tax? I hope I’ve made my thoughts understood. If you have any other suggestions or work around to minimise tax I’m all ears.
When we bought our land we had to pay the capital gains tax, I too could not grasp why should the buyer pay that. But that seems to be the law here. It's the buyer who pays the CGT. But you still have to pay the annual housing tax if living in it or not. You would be better asking on an expat forum. Philippines expat forum.
No it is the seller that pays CGT. If, as a buyer you agree to pay it, it's is part of the deal that you have have negotiated. A friend of mine bought a house about 6 months ago. He made a lower offer than the seller was asking and the seller accepted his offer on the condition of my friend paying the CGT.
I stand corrected, but we paid the CGT when we bought the land, it was along time ago but at the time I thought why should we pay it. Oh well, water under the bridge.
When you built your house did you register it with the BIR? If you didn't you can avoid paying Capital Gains Tax ..... however sometimes the seller and the buyer split this cost. Best idea is to inflate the property so the CGT does not affect you.
There's some land in front of ours which we was intersted in till we heard about the price, 2k sqm. Beach lots are going for crazy money probably going up in price as I type. We are about 200 meters from the beach.
That's some pretty expensive carpet 30 quid per sqm, I just checked carpet prices in the UK and 30 quid per sqm is not unheard of but you can get quite a lot for about half that land which just sits there more expensive than the carpet you would floor it with I think I missed the boat entirely on the build your own home lark, to be honest I probably missed the boat completely on ever owning my own fully paid for home.
Sounds cheap when you look at it that way but buying 4000 sqm! Yep, you missed the boat big time. The owner of the said lot lives in Italy, married to a Filipina they bought loads of land dirt cheap, pun not intended.
Good pun though I didn't have the money back then largely because Ana was throwing all the money I had at the Casino, had she been frugal for a couple of years we could possibly have got on that bandwagon. 4000 sqm that's 1 acre, wow!
We wanted to buy 250 sqm but they would not split the land, so no one could built in front of our land.
