CAPITAL GAINS TAX FOR ONEROUS TRANSFER OF REAL PROPERTY

CLASSIFIED AS CAPITAL ASSETS (TAXABLE AND EXEMPT)

Tax Form

BIR Form 1706 – Final Capital Gains Tax Return (For Onerous Transfer of Real Property
Classified as Capital Assets -Taxable and Exempt)

Documentary Requirements

Mandatory Requirements [additional two (2) photocopies of each document]:

1. Taxpayer Identification Number (TIN) of Seller/s and Buyer/s;

2. Duly Notarized Original Deed of Absolute Sale/Deed of Transfer;
3. Certified True Copy/ies of the Tax Declaration at the time or nearest to the date of the
transaction issued by the Local Assessor’s Office for land and improvement;
4. Certified True Copy/ies of Original/Transfer/Condominium Certificate/s of Title
(OCT/TCT/CCT);
5. Sworn Declaration of No Improvement by at least one (1) of the transferees or
Certificate of No Improvement issued by the Assessor’s Office, if applicable;
6. Validated return and Original Official Receipt/Deposit Slip as proof of payment; for
no payment return, copy of Acknowledgment Receipt of return filed thru eBlRForms;
7. Acknowledgment receipt of proceeds of sale from the seller;
8. Secretary’s Certificate or Board Resolution, approving the sale/transfer of the real
property and indicating the name and position of the authorized signatory to the Deed of
Sale/Assignment, if the seller/transferor is a corporation;
9. Duly Notarized Original Special Power of Attorney (SPA) from the transacting party/ies
if the person signing is not one of the parties to the Deed of Transfer;

For sales made in prior years [additional two (2) photocopies of each document]

Certified True Copy of Deed of Sale/Assignment/Exchange or certification of notarization issued

by the Clerk of Court of City/Municipality or Regional Trial Court (RTC) or the Office of the
Executive Judge of the City/Municipality where the Notary Public is registered or certification of
notarization from the National Archives Office

Other Additional Requirements, if applicable [additional two (2) photocopies of each

document]:

 Duly Notarized Original Special Power of Attorney (SPA), if the person

transacting/processing the transfer is not a party to the transaction
 Certification from the Philippine Consulate if document is executed abroad
 Location Plan/Vicinity map issued by the Local Assessor’s Office if zonal value cannot
be readily determined from the documents submitted
 Certificate of Exemption/BIR Ruling issued by the Commissioner of Internal Revenue or
his authorized representative, if tax exempt
  Such other documents as may be required by law/rulings/regulations/etc.

Procedures

 Who shall file

The Capital Gains Tax Return (BIR Form No. 1706) shall be filed in triplicate copies by the
Seller/Transferor who are natural or juridical whether resident or non-resident, including Estates
and Trusts, who sell, exchange, or dispose of a real property located in the Philippines classified
as capital asset as defined under Sec. 39 (A) (1) of RA No. 8424. The term “sale” includes pacto
de retro sale and other forms of conditional sales. The transaction may be taxable or exempt.

Taxpayers who are filing BIR Form No. 1706 are excluded in the mandatory coverage from
using the eBIRForms (Section 2 of RR No. 9-2016)

 When and Where to File and Pay

The Capital Gains Tax Return (BIR Form No. 1706) shall be filed and paid within thirty (30)
days following the sale, exchange or disposition of real property, with any Authorized Agent
Bank (AAB) or Revenue Collection Officer (RCO) of the Revenue District Office (RDO) having
jurisdiction over the place where the property being transferred is located.

When the return is filed with an AAB, taxpayer must accomplish and submit BIR-prescribed
deposit slip, which the bank teller shall machine validate as evidence that payment was received
by the AAB. The AAB receiving the tax return shall stamp mark the word “Received” on the
return and also machine validate the return as proof of filing the return and payment of the tax by
the taxpayer, respectively. The machine validation shall reflect the date of payment, amount paid
and transactions code, the name of the bank, branch code, teller’s code and teller’s initial. Bank
debit memo number and date should be indicated in the return for taxpayers paying under the
bank debit system.

Filing and payment may also be made using the electronic filing and payment facilities of the
BIR (i.e., EFPS/eBIRForms and G-cash, credit, debit card/prepaid card)

For transactions covered by one (1) Deed of Sale/Exchange/Donation involving one (1) to three
(3) properties, the taxpayer can avail of the ‘fast lane’ pursuant to Revenue Memorandum
Circular (RMC) No. 43-2018, as amended by RMC No. 107-2018. Payments amounting to
twenty thousand pesos (P 20,000.00) and below shall be paid in cash while payments above
twenty thousand pesos (P 20,000.00) shall be made through Manager’s Check or Cashier’s
Check to the RCO of the RDO having jurisdiction over the place where the property being
transferred is located.

Tax Rate

For real property - 6%.