Capital gains tax

[stevewool]

Wow lots of confusion, still trying to understand what I asked and all the answers, but thank you everyone for taking your time to write something 

[hk blues]

3 hours ago, stevewool said:

Wow lots of confusion, still trying to understand what I asked and all the answers, but thank you everyone for taking your time to write something 

Basically, as the seller you are required to pay 6% of the selling price or fair market value (whichever is higher) when you sell the property.  I may be wrong, but I think the seller doesn't actually pay but the buyer does and deducts the amount paid from the payment to the seller.

[GeoffH]

12 hours ago, hk blues said:

 I think the seller doesn't actually pay but the buyer does and deducts the amount paid from the payment to the seller.

Or... the seller doesn't pay and insists that the buyer pays it but... won't accept the amount being deducted; it's more fun in the Philippines 

[hk blues]

4 hours ago, GeoffH said:

Or... the seller doesn't pay and insists that the buyer pays it but... won't accept the amount being deducted; it's more fun in the Philippines 

On reading the BIR rules on this, it states that the buyer should pay the amount due and deduct from the monies due to the seller.  It's all part of the negotiation as to where the money comes from and when but the buyer is on the hook for the tax.  

[Dave Hounddriver]

1 hour ago, hk blues said:

On reading the BIR rules on this, it states that the buyer should pay the amount due and deduct from the monies due to the seller.

What does it say about the seller getting that money back if he rebuilds within a certain time?  Sounds contradictory without even hearing the answer.

[hk blues]

2 hours ago, Dave Hounddriver said:

What does it say about the seller getting that money back if he rebuilds within a certain time?  Sounds contradictory without even hearing the answer.

No idea. I just quickly googled the rates and up popped the procedure for payment which stated the buyer had to pay and then deduct the payment from the money to be paid to the seller.  The only reason I can image for this contradiction is to ensure the money is paid to the BIR as the buyer is in effect handing over someone else's money.  Also, the procedure for processing CGT is different for each type of asset i.e. stocks v property.

 

 

 

[Kingpin]

19 hours ago, hk blues said:

On reading the BIR rules on this, it states that the buyer should pay the amount due

It doesn't say that, the BIR is taxing (and refunding) the seller not the buyer:

Quote

In case of sale/transfer of principal residence, the Buyer/Transferee shall withhold from the seller and shall deduct from the agreed selling price/consideration the 6% capital gains tax which shall be deposited in cash or manager’s check in interest-bearing account with an Authorized Agent Bank (AAB) under an Escrow Agreement between the concerned Revenue District Officer, the Seller and the Transferee, and the AAB

See below, there is no 'contradiction'

17 hours ago, Dave Hounddriver said:

What does it say about the seller getting that money back if he rebuilds within a certain time?

If requirements are met, the seller ("Transferor") gets refunded. If not, he pays his tax.

Quote

 the amount so deposited shall only be released to such Transferor upon certification by the said RDO that the proceeds of the sale/disposition thereof has, in fact, been utilized in the acquisition or construction of the Seller/Transferor’s new principal residence within eighteen (18) calendar months from date of the said sale - https://www.bir.gov.ph/index.php/tax-information/capital-gains-tax.html

 

 

 

 

[Mike J]

4 minutes ago, Kingpin said:

It doesn't say that, the BIR is taxing (and refunding) the seller not the buyer:

See below, there is no 'contradiction'

If requirements are met, the seller ("Transferor") gets refunded. If not, he pays his tax.

 

 

 

 

This being the Philippines, I can't help but wonder how often the rules are followed? 

[Kingpin]

24 minutes ago, Mike J said:

This being the Philippines, I can't help but wonder how often the rules are followed? 

Maybe the BIR can answer that for you

[hk blues]

3 hours ago, Kingpin said:

It doesn't say that, the BIR is taxing (and refunding) the seller not the buyer:

 

23 hours ago, hk blues said:

On reading the BIR rules on this, it states that the buyer should pay the amount due and deduct from the monies due to the seller. 

 

3 hours ago, Kingpin said:

In case of sale/transfer of principal residence, the Buyer/Transferee shall withhold from the seller and shall deduct from the agreed selling price/consideration the 6% capital gains tax