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Capital Gains Tax on Property obtained at Preselling stage

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Shiela C

Arresto Menor
Hi, I have a question. If I want to transfer the title of a property, still at a preselling stage, to someone, will I be charged of Capital Gains Tax? I am now on the 26th month of paying the installment of an Avida property. The number of installments is 36months, but I am thinking of selling it to someone else.

The problem is Avida asked me to pay Capital Gains Tax right away. My understanding of CGT is you only pay it once you have the Deed of Absolute Sale already, or if you have paid all the monthly amortizations but before the DOAS is issued. My friend’s experience with DMCI is they only charged her a Transfer fee for a change in name amounting to PhP5,000 when she assumed a property from someone else during the pre-selling stage. My question is: Is Avida right in charging CGT at this stage of the transaction when there is no DOAS yet and the unit will only be fully paid next year?

Thanks very much for you help.

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tsi ming choi

Reclusion Perpetua
Avida is not correct.

Avida property cannot charge CGT over the properties sold by them because as far as Avida is concern, such properties are not considered as Capital assets. Hence, payment of CGT is not necessary for the transfer of such properties REGARDLESS of whatever stage of transaction can be had.

Further, your friends experience in the charging of transfer fee is proper for the assumption of the property at pre-selling stage. This is the usual "kalakaran" in real estate business, although the law is silent about that.

However, it is different if you are the one selling your property, here it is required for you to pay CGT because such property is considered as Capital assets, on a presumption that you are not engaged in real state business.

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