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Tradisyon vs. Responsibilidad: Ano ang Haharap ni Teacher Christine?

Si Teacher Christine, isang bagong guro na puno ng sigla at pangarap, ay nakatagpo ng isang di inaasahang tradisyon sa kanyang unang linggo sa trabaho. Inaasahan daw siyang magpakain sa buong faculty mula sa kanyang unang sahod. Bagamat tila isang simpleng kahilingan, nagpresenta ito ng isang malaking hamon para kay Teacher Christine. Habang ang ilan sa kanyang mga kasamahan ay masayang-masaya sa ideya ng isang piging, si Teacher Christine ay may ibang mga prayoridad. Ang kanyang unang sahod ay nakatakdang bayaran ang mga utang na naipon niya sa panahon ng kanyang pag-aaral at paghahanap ng trabaho. Mayroon din siyang pamilya na sinusuportahan. Sa kabila ng pagnanais na makihalubilo sa kanyang mga kasamahan, alam ni Teacher Christine na hindi niya kayang bayaran ang isang malaking handaan. Sa halip na tumanggi nang buo, matapang na ipinaliwanag ni Teacher Christine ang kanyang sitwasyon sa kanyang mga kasamahan. Ipinahayag niya ang kanyang pagnanais na sundin ang tradisyon sa ibang par...
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Download BIR Form No. 1706: Capital Gains Tax Return

When selling, exchanging, or disposing of real property in the Philippines classified as a capital asset, taxpayers must fulfill their obligations with the Bureau of Internal Revenue (BIR). One of the essential requirements is filing BIR Form No. 1706 - Capital Gains Tax Return to secure a Tax Clearance Certificate, allowing the transfer of ownership to the buyer.

Who Needs to File BIR Form No. 1706?

This form must be filed jointly in triplicate copies by both the Buyer/Transferee and the Seller/Transferor—whether individuals or entities, resident or non-resident, including estates and trusts—who dispose of real property classified as a capital asset. According to Section 39(A)(1) of RA 8424, capital assets refer to properties not used in trade or business. Filing this return ensures compliance with tax regulations and facilitates property title transfers.

The term “sale” includes pacto de retro sale and other forms of conditional sales. The transaction may be taxable or exempt.

The Buyer/Transferee must withhold and deduct from the agreed selling price a 6% capital gains tax, based on the higher of the selling price, zonal value, or fair market value per tax declaration.

For sellers availing of the tax exemption for principal residences, the capital gains tax must be deposited in escrow, as provided under Revenue Regulations (RR) No. 13-1999, amended by RR No. 14-2000.

Definition of Principal Residence

A principal residence refers to a dwelling house (including the land it stands on) where an individual or family resides. Temporary absence due to travel, work, or studies does not affect this classification, provided the individual intends to return. Specific rules apply when the land and house are owned by different parties, co-owners, or inherited property.

When is Filing Not Required?

There are certain exemptions where filing BIR Form No. 1706 is no longer necessary:

  • The property is not classified as a capital asset.

  • The real property is located outside the Philippines.

  • The transaction is a gratuitous transfer (e.g., donation or inheritance).

  • The disposition is pursuant to the Comprehensive Agrarian Reform Program.

Where to File?

The return should be filed with the Revenue District Office (RDO) that has jurisdiction over the location of the property being transferred.

Filing Deadlines

Timely filing is crucial to avoid penalties. Here’s when to file BIR Form No. 1706:

  • Within 30 days following the sale, exchange, or disposition of real property.

  • For installment sales:

    • Within 30 days after receiving the first downpayment.

    • Within 30 days after each subsequent installment payment.

  • Separate returns must be filed for each transfer document, regardless of how many properties are included in the transaction.

How and Where to Pay?

Payments should be made through an Authorized Agent Bank (AAB) under the jurisdiction of the RDO where the property is located. Accepted payment methods include:

  • Cash payments (for amounts ₱20,000 and below).

  • Manager’s check or cashier’s check (for amounts above ₱20,000).

  • Online payments via AABs’ e-payment channels, credit/debit/prepaid cards, and mobile payments.

Taxpayers must present a BIR-prescribed deposit slip, which will be validated by the bank as proof of payment.

Rate and Basis of Tax

The final tax rate is 6%, applied to the highest of the following:

  1. Zonal value (as determined by the BIR Commissioner),

  2. Fair market value (as assessed by the Provincial/City Assessor), or

  3. Selling price or fair market value of the property received in an exchange.

Penalties for Non-Compliance

Failure to file and pay on time may result in the following penalties:

  • 25% surcharge for late filing, incorrect filing, or failure to pay the full amount.

  • 50% surcharge for willful neglect or fraudulent filing.

  • Interest penalties based on the Bangko Sentral ng Pilipinas’ legal interest rate.

  • Compromise penalties as per BIR regulations.

Required Documents for Tax Clearance

To obtain the electronic Certificate Authorizing Registration (CAR), taxpayers must submit the following:

Mandatory Requirements:

  1. Taxpayer Identification Number (TIN) of both Seller and Buyer.

  2. Notarized Deed of Absolute Sale/Deed of Transfer.

  3. Certified True Copy of the Tax Declaration (land and improvement) from the Assessor’s Office.

  4. Certified True Copy of Original/Transfer/Condominium Certificate of Title (OCT/TCT/CCT).

  5. Special Power of Attorney (SPA) (if the signatory is not one of the parties).

  6. Sworn Declaration of No Improvement or Certificate of No Improvement (if applicable).

  7. Official Receipts/Deposit Slips showing proof of tax payments.

  8. Board Resolution/Secretary’s Certificate (if the seller is a corporation).

Additional Requirements (if applicable):

  • Certified True Copy of Deed of Sale/Assignment/Exchange (for sales made over a year prior).

  • Certification from Philippine Consulate or Hague Apostille Convention (for transactions executed abroad).

  • Location Plan/Vicinity Map (if zonal value is unclear).

  • BIR Ruling/Certificate of Exemption (if transaction is tax-exempt).

All returns filed by a tax agent must include their BIR accreditation number, Attorney’s Roll Number, or Mandatory Continuing Legal Education Compliance Number (for lawyers).

Download BIR Form No. 1706

To obtain a copy of BIR Form No. 1706, click the link below:

Download BIR Form No. 1706 - Capital Gains Tax Return (PDF)

For additional guidance, you may also check the official BIR guidelines on completing and submitting the form.

Final Thoughts

Properly filing BIR Form No. 1706 is a vital step in ensuring a smooth and legally compliant real estate transaction. Whether you're selling a house, land, or any other real property classified as a capital asset, meeting the filing requirements will help you avoid complications and penalties. Always consult with a tax professional or visit the nearest BIR office for assistance in completing your tax obligations.

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