How to Calculate Capital Gains Tax Philippines 2025: Step-by-Step Guide
Calculating Capital Gains Tax (CGT) in the Philippines can seem complex, but with the right formulas and understanding of the latest 2025 rates, it becomes straightforward. This comprehensive guide provides step-by-step calculations with real-world examples for different types of capital assets.
Understanding the Basic Formula
The fundamental formula for calculating Capital Gains Tax is:
Capital Gains = Selling Price - Cost Basis
Capital Gains Tax = Capital Gains × Tax Rate
Where:
- Selling Price: The amount received from the sale
- Cost Basis: The original purchase price plus improvements
- Tax Rate: Varies by asset type (6% for real estate, 0.1% for stocks, 15% for foreign shares)
💡 Quick Reference: For comprehensive tax planning, use our Philippines Tax Calculator to understand how your salary, allowances, and investment income work together with the tax system.
Real Estate Capital Gains Tax Calculation
Basic Real Estate Formula
CGT = (Selling Price - Cost Basis) × 6%
Step-by-Step Process
Determine the Selling Price
- Actual amount received from the buyer
- Include any additional payments or considerations
Calculate the Cost Basis
- Original purchase price
- Plus: Legal fees, transfer taxes, and other acquisition costs
- Plus: Capital improvements (renovations, extensions, etc.)
- Minus: Depreciation (if applicable)
Calculate Capital Gains
- Subtract cost basis from selling price
Apply the 6% Tax Rate
- Multiply capital gains by 0.06
Real Estate Example 1: House Sale
Scenario: Selling a house purchased in 2020
Given:
- Original purchase price: PHP 1,500,000
- Legal fees and transfer taxes: PHP 50,000
- Renovation costs: PHP 200,000
- Selling price: PHP 2,200,000
Calculation:
Cost Basis = 1,500,000 + 50,000 + 200,000 = PHP 1,750,000
Capital Gains = 2,200,000 - 1,750,000 = PHP 450,000
CGT = 450,000 × 6% = PHP 27,000
Real Estate Example 2: Condominium Unit
Scenario: Selling a condo unit with depreciation
Given:
- Original purchase price: PHP 3,000,000
- Acquisition costs: PHP 100,000
- Depreciation (5 years): PHP 150,000
- Selling price: PHP 3,500,000
Calculation:
Cost Basis = 3,000,000 + 100,000 - 150,000 = PHP 2,950,000
Capital Gains = 3,500,000 - 2,950,000 = PHP 550,000
CGT = 550,000 × 6% = PHP 33,000
Stock Transaction Tax Calculation
Stock Transaction Formula
Stock Transaction Tax = Transaction Value × 0.1%
Note: This is not technically a capital gains tax but a transaction tax on the total value of the transaction.
Stock Example 1: Local Stock Sale
Scenario: Selling 1,000 shares at PHP 50 per share
Given:
- Number of shares: 1,000
- Selling price per share: PHP 50
- Transaction value: 1,000 × 50 = PHP 50,000
Calculation:
Stock Transaction Tax = 50,000 × 0.1% = PHP 50
Stock Example 2: Large Stock Transaction
Scenario: Selling 10,000 shares at PHP 25 per share
Given:
- Number of shares: 10,000
- Selling price per share: PHP 25
- Transaction value: 10,000 × 25 = PHP 250,000
Calculation:
Stock Transaction Tax = 250,000 × 0.1% = PHP 250
Foreign Shares Capital Gains Tax
Foreign Shares Formula
CGT = (Selling Price - Cost Basis) × 15%
Foreign Shares Example
Scenario: Selling shares in a US company
Given:
- Original purchase price: USD 10,000 (PHP 560,000 at PHP 56/USD)
- Selling price: USD 15,000 (PHP 840,000 at PHP 56/USD)
- Exchange rate: PHP 56 per USD
Calculation:
Cost Basis = PHP 560,000
Selling Price = PHP 840,000
Capital Gains = 840,000 - 560,000 = PHP 280,000
CGT = 280,000 × 15% = PHP 42,000
Advanced Calculation Scenarios
Scenario 1: Multiple Real Estate Sales
Situation: Selling two properties in the same year
Property A:
- Selling price: PHP 2,000,000
- Cost basis: PHP 1,500,000
- Capital gains: PHP 500,000
Property B:
- Selling price: PHP 1,800,000
- Cost basis: PHP 2,000,000
- Capital loss: PHP 200,000
Calculation:
Net Capital Gains = 500,000 - 200,000 = PHP 300,000
CGT = 300,000 × 6% = PHP 18,000
Scenario 2: Installment Sale
Situation: Selling property with installment payments
Given:
- Total selling price: PHP 3,000,000
- Down payment: PHP 1,000,000
- Monthly payments: PHP 50,000 for 40 months
- Cost basis: PHP 2,000,000
Calculation:
Total Capital Gains = 3,000,000 - 2,000,000 = PHP 1,000,000
CGT on Down Payment = 1,000,000 × 6% = PHP 60,000
CGT on Installments = 1,000,000 × 6% = PHP 60,000 (spread over payment period)
Special Considerations and Exemptions
Principal Residence Exemption
Requirements:
- Must be your principal residence
- Must purchase new principal residence within 18 months
- One-time exemption only
Calculation with Exemption:
If qualified for exemption: CGT = PHP 0
If not qualified: CGT = Capital Gains × 6%
Inherited Property
Special Rule: No CGT if sold within one year of inheritance
Calculation:
If sold within 1 year: CGT = PHP 0
If sold after 1 year: CGT = Capital Gains × 6%
Tax Planning Strategies
1. Timing Your Sales
Strategy: Spread sales across different tax years
Example:
- Year 1: Sell Property A (PHP 500,000 capital gains)
- Year 2: Sell Property B (PHP 300,000 capital gains)
- Total CGT: (500,000 × 6%) + (300,000 × 6%) = PHP 48,000
2. Offsetting Gains with Losses
Strategy: Sell losing investments to offset gains
Example:
- Stock gains: PHP 100,000
- Stock losses: PHP 50,000
- Net gains: PHP 50,000
- CGT: 50,000 × 0.1% = PHP 50
3. Cost Basis Optimization
Strategy: Maximize deductible costs
Include in Cost Basis:
- Original purchase price
- Legal fees
- Transfer taxes
- Capital improvements
- Renovation costs
- Professional fees
Common Calculation Mistakes
Mistake 1: Using Wrong Tax Rate
Wrong: Using 10% for real estate (old proposed rate) Correct: Use 6% for real estate in 2025
Mistake 2: Incorrect Cost Basis
Wrong: Using only purchase price Correct: Include all acquisition costs and improvements
Mistake 3: Ignoring Exchange Rates
Wrong: Using old exchange rates for foreign investments Correct: Use current exchange rates at time of sale
Mistake 4: Missing Deductions
Wrong: Not including all deductible expenses Correct: Include all legitimate costs in cost basis
Using Technology for Calculations
Excel Formulas
Real Estate CGT:
=MAX(0,(SellingPrice-CostBasis))*0.06
Stock Transaction Tax:
=TransactionValue*0.001
Foreign Shares CGT:
=MAX(0,(SellingPrice-CostBasis))*0.15
Online Calculators
Several online tools can help with CGT calculations:
- BIR official calculator
- Bank-provided calculators
- Third-party tax calculators
- Philippines Tax Calculator - Comprehensive tool for salary and tax calculations
Filing and Payment Process
Required Forms
- BIR Form 1707: Individual taxpayers
- BIR Form 1707A: Corporations
- Supporting documents: Deeds, receipts, certificates
Payment Methods
- BIR eFPS: Online payment system
- Authorized agent banks: Over-the-counter payment
- GCash/PayMaya: Mobile payment options
Deadlines
- Filing: Within 30 days from sale
- Payment: Same day as filing
- Late fees: 25% surcharge + interest
Conclusion
Calculating Capital Gains Tax in the Philippines requires understanding the specific rates for different asset types and following the correct formulas. The 2025 reforms have simplified some aspects while maintaining the 6% rate for real estate and reducing stock transaction taxes to 0.1%.
Key Points to Remember:
- Real estate: 6% on capital gains
- Local stocks: 0.1% transaction tax
- Foreign shares: 15% on capital gains
- File within 30 days
- Include all costs in cost basis
- Consider tax planning strategies
For comprehensive tax planning that includes both your salary and investment income, use our Philippines Tax Calculator to get a complete picture of your tax obligations and take-home pay.
Always consult with a tax professional for complex situations and ensure compliance with all BIR requirements.
References and Sources
Bureau of Internal Revenue (BIR) - Official tax forms and regulations - bir.gov.ph
KPMG Philippines - “Legislation Rationalizing Tax Rates on Passive Investments Signed into Law” (July 2025) - kpmg.com
Tax Calculator Philippines - “Capital Gains Tax Philippines” (2025) - taxcalculatorphilippines.org
PwC Philippines - “CMEPA: A New Era for Investment Taxation” (2025) - pwc.com
Philippine Star - “No new taxes to be imposed, says DOF” (April 2025) - philstar.com
BusinessWorld - “Capital gains tax hike expected to make land more costly” (May 2025) - bworldonline.com
EastWest Bank - “New Tax Rules for Smarter Investing” (2025) - eastwestbanker.com
This guide provides general information and examples. Tax situations can be complex, and individual circumstances may vary. Always consult with a qualified tax professional for specific advice.