TYPES OF GAINS ON

DEALING IN PROPERTIES
Ordinary Gain
- Arises from the sale, exchange and
other disposition including pacto de
retro sales and other conditional
sales of ordinary assets.

Capital Gain
- Arises from sale, exchange, and
other disposition including pacto de
retro sales and other conditional sales
or capital assets.
Type of Gain Applicable taxation Scheme
Ordinary Gains Regular Income Tax

Capital Gains General Rule: Regular

income tax
Exception Rule: Capital
gains tax

CAPITAL GAINS SUBJECT TO CAPTIAL GAINS TAX

1. Capital sales on the sale of domestic stocks sold directly to buyer

2. Capital gains on the sale of real properties not used in business
SCOPE OF CAPITAL GAINS TAXATION
Gains on dealing in capital assets Tax Rates

> Gain on the sale, exchange, and other disposition of 15% capital gains
domestic stocks and directly to buyer tax

> Sale, exchange, and other disposition of real property 6% capital gains
in the Philippines tax

>Gains from other capital assest Regular income tax

Capital Gain on the Sale,
Exchange, and Other
Disposition of Domestic
Directly to Buyer
Domestic Stocks
- Domestic Stocks are evidence of ownership or rights
ownership in a domestic corporation regardless of its
features, such as:

1. Preferred Stocks
2. Common Stocks
3. Stock Rights
4. Stock Options
5. Stock Warrants
6. Unit of Participation in any association, recreation, or
amusement club
Other Kinds of Dispositions:
1. Foreclosure of property in settlement of debt
2. Pacto de retro sales – sale with buy back agreement
3. Conditional sales – sales which will be perfected upon completion of certain
specified conditions.
4. Voluntary buy back of shares by the issuing corporation – redemption of
shares which may be re-issued and not intended for cancellation.

The term other disposition does not include:

1. Issuance of stocks by a corporation
2. Exchange of stocks for services
3. Redemption of shares in a mutual fund
4. Worthlessness of stocks
5. Redemption of stocks for cancellations by the issuing corporation
6. Gratuitous transfer of stocks.