Sample CGT computation

A residential condominium in Makati City with a floor area of 50sqm has a Selling Price (SP) of 1.0M. The existing
zonal value per square meter for that condo in Makati is currently Php50,000/sqm. You have called the owner and
found out that he is not engaged in the real estate business.
He also told you that as part of the deal, the buyer shall shoulder the CGT. As the buyer, how much is the CGT which
you will have to pay the seller on top of the selling price?

First lets compute for the Fair market Value (FMV):

FMV=Zonal Value x Floor Area
=50,000 pesos/sqm x 50sqm
=2,500,000 pesos
Since FMV is higher than SP, we shall use FMV to compute the CGT:
CGT=6% x FMV
=0.06 x 2,500,000 pesos
=150,000 pesos
Therefore, the buyer shall have to shell out an additional 150,000 pesos.
Note that while technically, the CGT is always the responsibility of the seller, and that if the buyer
shoulders the CGT, it is in effect part of the selling price to be compared to FMV for purposes of
computing the 6% CGT, I noted that the practice of banks is to compute the CGT this way.
Now, what if you called up the seller and told him that you are willing to buy the property but he
should shoulder the capital gains tax as the seller, then he counters your offer and says he is willing to
shoulder the CGT up to his selling price and the buyer shall shoulder the CGT for the excess or the
difference between the SP and FMV, how do you compute for the CGT?
First, lets compute for the excess or difference between the SP and the FMV:
Excess=FMV-SP
=2,500,000pesos 1,000,000pesos
=1,500,000 pesos
Now, lets compute for the CGT to be shouldered by the buyer:
CGT for the buyer =6% x Excess
=0.06 x 1,500,000 pesos
=90,000 pesos
The CGT to be shouldered by the seller is as follows:
CGT=6% x SP
=0.06 x 1,000,000 pesos
=60,000 pesos

Take note that the total CGT is 90,000 pesos + 60,000 pesos = 150,000 pesos, which is consistent with
our first computation. The CGT was just split between the buyer and the seller.
As investors, we should always try to negotiate for the best terms and in relation to this particular
example, always try to have the other party shoulder the CGT.
The seller will still be the one to file the CGT and he shall have to file the return in an Authorized Agent
Bank within the Revenue District where the property is located in Makati, within 30 days the deed of
sale was executed.

BP 220

Social Housing Law (1982)

An act authorizing the Ministry of Human Settlements ( now HLURB) to establish and
promulgate different levels of standards for Economic and Socialized Housing

~ Liberalizing land development and construction standards to enable production of low-cost

housing.
Authorizes HLRUB to promulgate different levels of standards and technical requirements for
economic and socialized housing projects from those provided for under PD 957, PD 1216, PD
1096 and PD 1185.
PD 1096
- National Building Code
~ Codifies all the laws, rules and standards for building construction.
PD 1096

- Fire Code

RA 4726
- Condominium Law (June 18, 1968)
~ Serves as the enabling law for the establishment of condominium corporations, and provides
the comprehensive rules on condominium ownership, registration of titles and condominium
administration.
- Republic Act 7899 (1995)
Amends Sections 4 and 16 of RA 4726 or the Condominium Act where HLURB is given
the following authorites:
a. Approval of any amendment to or revocation of the enabling or master deed of a
condominium project subject to consent by a simple majority of all registered owners,
and where prior notification to all registered owner is done.
b. Approval of the expansion of a condominium corporation or integration of a
condominium project with another project upon the affirmation vote of a simple
majority of registered owners.
EO 648

- HLURB assumed the functions of NHA on Real estate Management (1981)

- The HLRUB was organized and revitalized and was vested with quasi-judicial powers to make
it a more effective regulatory agency. By virtue of said order, it assumed the functions of the
National Housing Authority on real estate management and was mandated to enforce P.D. 957,
P.D. 1216 and P.D. 1517 among others.
~ Designates the HLURB (formerly HSRC) as the implementing agency for PD 957 and BP 220,
and confers regulatory and quasi-judicial powers for this purpose. Empowers the HLURB,
among others, to: (a) prescribe the standards for land and housing development, (b) regulate
land and housing development projects, and (c) prescribe the guidelines and standards for the
preparation by LGUs of comprehensive land use plans.

EO 90

- National Shelter program (1986)

- designed HLURB as the sole regulatory body of Housing and land development
- The HLURB was designated as the sole regulatory body for housing and land development. It
was mandated to encourage greater private sector participation in low cost housing through
liberalization of development standards, simplification of regulations and decentralization of
permits and licenses. It was identified together with National Housing Authority (NHA), National
Home Mortgage and Finance Corp. (NHMFC) and Home Guaranty Corporation (HGC), as a key
shelter agency under housing activities of the government to ensure the accomplishment of
National Shelter Program.

RA 8763
- Home Guaranty Act
- Transferred to HLURB all the powers, authorities and responsibilities with respect to
supervision of homeowners associations
On Agrarian Reform
PD 27
- Tenants Emancipation Decree ( for rice and corn)
RA 3844

- Code of Agrarian reform

RA 6657
- Comprehensive Agrarian Reform Law amending RA 3844 ( June 15,1988)
- Implements a comprehensive agrarian reform with the intention that any conversion of
private land to non-agricultural uses should first be cleared before hand by the Department of
Agrarian Reform.

RA 9700

- Act extending RA 6657

On Land Reform
PD 1517 - Proclaiming Urban Land Reform in the Philippines (June 11, 1978)
- Provides for protection of legitimate tenants and requires clearance for development
proposals and land transactions in proclaimed Area for Priority Development (APDs) and Urban
Land Reform Zones (ULRZs). Its important features is under Section 6, defines legitimate
tenants as follows

Ten years residency or more

They were the ones who built their homes

Legally occupied the lands by virtue of contract with landowners continously for ten years

Used the lands for residential purpose only.