ACCOUNTING PROFICIENCY

PROGRAM
CAPITAL GAINS TAX
JHON CARLO M. CATU, CPA
• Capital Assets

Capital Gains from Sale of Shares of Stock not Traded in the Stock
Not over P100,000 5%
On any amount in excess of P100,00 10%

Capital Gains from sale of Real Property- six percent (6%) based on the gross
selling price or current fair market value as determined in accordance with
Section (E) of this code.
Capital gains presumed to have been realized from the sale or disposition of their
principal residence by natural persons, the proceeds of which is fully utilized in
acquiring or constructing a new principal residence within eighteen (18) calendar
months from the date of sale or disposition, shall be exempt from the capital gains tax
imposed under this Subsection: Provided,
a. )That the historical cost or adjusted basis of the real property sold or disposed
shall be carried over to the new principal residence built or acquired:
b. ) That the Commissioner shall have been duly notified by the taxpayer within thirty
(30) days from the date of sale or disposition through prescribed return of his
intention to avail of the tax exemption herein mentioned .
c. ) Exemption can only be availed every ten (10) years.
QUESTION NUMBER 1

The term “capital assets” include

A. Stock in trade or other property included in the taxpayer’s inventory.
B. Real property not used in the trade or business of taxpayer.
C. Property primarily for sale to customers in the ordinary course of his trade
or business.
D. Property used in the trade or business of the taxpayer and subject to
depreciation.
QUESTION NUMBER 2

A sold his principal residence at a selling price of P5M but with a FMV of P6M.
The property sold was acquired for P3M. He purchased his new principal
residence at a cost of P7M. The capital gains tax is _______
QUESTION NUMBER 2

A sold his principal residence at a selling price of P5M but with a FMV of P6M.
The property sold was acquired for P3M. He purchased his new principal
residence at a cost of P7M after one year. The capital gains tax is _______
Answer: Zero
If the proceeds from the disposition of principal residence are fully utilized in
acquiring or constructing a new principal residence within 18 months from the date
of disposition (date of notarization), the transaction is exempted from capital gains
tax subject to conditions.
QUESTION NUMBER 3

A sold his principal residence at a selling price of P5M but with a FMV of P6M.
The property sold was acquired for P3M. He purchased his new principal
residence at a cost of P7M. How much is the basis (cost) of the new principal
residence?
QUESTION NUMBER 3

A sold his principal residence at a selling price of P5M but with a FMV of P6M.
The property sold was acquired for P3M. He purchased his new principal
residence at a cost of P7M. How much is the basis (cost) of the new principal
residence?
Answer: P5M
Basis of the New Principal Residence Formula:

Basis of the old Principal Residence Sold XXX

Add: Additional construction cost incurred
Total Cost of constructions XXX
Less: Utilized Proceeds of Sales XXX XXX
BASIS OF THE NEW PRINCIPAL RESIDENCE XXX
Basis of the New Principal Residence Formula:

Basis of the old Principal Residence Sold 3,000,000

Add: Additional construction cost incurred
Total Cost of constructions 7,000,000
Less: Utilized Proceeds of Sales 5,000,000 2,000,000
BASIS OF THE NEW PRINCIPAL RESIDENCE 5,000,000
QUESTION NUMBER 4

If only P3.8 M out of P5 M was utilized in acquiring his new

principal residence, the capital gain tax is _______________?
QUESTION NUMBER 4

If only P3.8 M out of P5 M was utilized in acquiring his new

principal residence, the capital gain tax is _______________?

Answer: P 86,400
Capital Gains Tax if Proceed is partially utilized
Selling Price P5,000,000
Fair Market Value P6,000,000 (higher)
“Should Be” Capital Gains Tax (P6 M x .06)= P 360,000
Capital Gains Tax= ( Unutilized Proceeds/ Total Proceeds ) x “Should Be CGT”
or
Capital Gains Tax= [( Unutilized Proceeds/ Total Proceeds ) X Selling Price or
Zonal Value or FMV, whichever is higher] x 6%
Using the preceding number, the basis (cost) of the
new principal residence is ______________.
Using the preceding number, the basis (cost) of the new
principal residence is ______________.
Answer: P2,280,000

New Principal Residence Basis:

= P3,800,000/ P5,000,000 x 3,000,000 (old)
= P2,280,000
OTHERS – REAL PROPERTIES
If Real Property is:
NIRC section 24A or Corporate Tax
… sold as inventory- Ordinary Gain/ ( Loss)
… used in the ordinary course of the business- Ordinary Gain / (Loss)

Capital Gains Tax or NIRC Section 24 A

… if Real Property Classified as Capital Asset is sold to any government
unit or any political subdivision or to any GOCCs by a citizen or alien
OTHERS – REAL PROPERTIES
Sale of Real Properties not located in the Philippines by a
resident citizen or domestic corporation- NIRC Section 24 A or
Corporate final tax rate of 30%
OTHERS- EQUITY SECURITIES

1. Sale of Stocks by an entity considered as Dealers in Securities- Ordinary

Income (usually Corporate Tax of 30%)
2. Sale of Stocks traded (listed) in the PSE by a Non-Dealer in Securities – ½
of 1%
3. Sale of Stocks not traded (listed) in PSE by a Non-Dealer in Securities:
Not in excess of P100,000 5%
Excess of P100,000 10%
Wash Sales – a sale or disposition of stock where in substantially identical
securities are acquired or purchased within a 61-day period (30 days before
sale and 30 days after sale)
Short Sale- selling of securities that are not under the ownership of the seller.