Selling property in the Philippines: Taxes for Americans

If you're an American who owns real estate in the Philippines, you might decide to sell at some point. Naturally, you're likely wondering about the taxes and fees that come with this transaction.

Your biggest expense will be paying the capital gains tax, and how it's calculated depends on whether you're selling a rental property or a property you didn't use to generate any sort of income.

But you'll also encounter other fees like stamp taxes and professional service costs, plus US tax obligations.

Here's everything you need to know about the taxes and expenses that come with selling property in the Philippines as an American owner.

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Table of contents
What types of taxes do you have to pay when selling property in the Philippines? US tax requirements when selling property in the Philippines How to avoid double taxation when selling property in the Philippines Special considerations

What types of taxes do you have to pay when selling property in the Philippines?

Like in most countries, when selling property in the Philippines, costs are typically divided between the buyer and seller (you).

As the seller, you're generally responsible for capital gains tax, broker commissions, and your legal fees. The buyer usually covers documentary stamp tax, local transfer tax, and registration fees for the title transfer.

That said, these responsibilities, especially the buyer's, are up for negotiation, so you should clearly state them in your sale agreement. If you don't discuss these, you, as a seller, may end up paying more than you need to.

Here are the taxes you should know about:

Capital gains tax for an ordinary asset (rental property)

Capital gains tax is the tax you pay on the profit you make from selling property.

If your property is classified as an ordinary asset, meaning you use it for business purposes like a rental property, the capital gains tax isn't a flat rate.¹

Instead, the profit from your sale gets added to your total income for the year and taxed at progressive rates based on the Philippine tax brackets. Here's what they are:²

Taxable income (PHP)	Tax on base amount (PHP)	Tax on excess
Over 0, not over 250,000	NA	0%
Over 250,000, not over 400,000	NA	15%
Over 400,000, not over 800,000	22,500	20%
Over 800,000, not over 2,000,000	102,500	25%
Over 2,000,000, not over 8,000,000	402,500	30%
Over 8,000,000	2,202,500	35%

This means that you could pay anywhere from 0% to 35% depending on your total income bracket.

💡 Learn more about property taxes in the Philippines.

Capital gains tax for a capital asset

If your property is a capital asset, which means that you don't use it for business, you'll pay a flat 6% capital gains tax on the property's gross selling price or fair market value.¹

You must pay this tax within 30 days after the deed of sale is notarized, using BIR Form 1706. Capital gains tax is a "final tax," which means that once you pay it, you don't need to report this gain again on your income tax return.³

If your Philippine property was your main home, you may be able to qualify for the principal residence exemption, but you must be a citizen or a resident to take advantage of it. You can also only use this exemption once every 10 years.³

Documentary stamp tax

Documentary stamp tax is a 1.5% tax on documents that transfer property rights.³ It's calculated on the higher of your selling price or the property's fair market value/assessed value.

Both buyer and seller are technically liable for this tax under the Philippine law, but it's customary for buyers to usually pay this tax.

That said, you should negotiate this and make it clear who's responsible for it in your sale agreement. Otherwise, it may fall on your shoulders.

Local transfer tax

The city or municipality where your property is located may charge you a local transfer tax when the ownership transfers from you to the buyer.

The rate varies. Provinces can charge up to 0.5% of the higher of your selling price or fair market value, and cities and municipalities in Metro Manila can charge up to 0.75%.³

Buyers typically pay this tax, though, like most fees, it can be negotiated. So, make sure you make it clear in your sale agreement that you, as the seller, aren't responsible for this tax.

Real estate agent fee

If you work with a licensed real estate broker to sell your property, expect to pay a commission between 3% and 5% of the gross selling price. The seller usually pays this fee.¹³

💡 You don't have to hire a real estate agent, but it can be very helpful, especially if you haven't moved to the Philippines from the US and are navigating the sale process from abroad.

Legal and notary fees

Hiring a lawyer is highly recommended when selling property in the Philippines, and it's rare to go through the process without one.

Your lawyer drafts and reviews the deed of sale, conducts due diligence, makes sure that all legal requirements are met, helps with tax calculations, and protects your interests throughout the transaction.

Lawyers may charge hourly rates, fixed fees for specific services (like drafting documents), or a percentage of the sale price, so the cost varies.

A notary public must also notarize the deed of sale to make it legally binding. Notarial fees typically range from 0.1% to 1% of the property value.³

Sellers usually cover their own legal fees, but notarial fees are often shared between the buyer and the seller. This is something you may be able to negotiate, too.

Value Added Tax (VAT)³

VAT is a 12% business tax that may apply to your property sale depending on your situation.

Generally, you have to pay it if you're VAT-registered (or required to be based on business turnover over 3 million PHP annually) or if you're selling certain types of properties above price thresholds.

VAT applies to residential lots over 3,600,000 PHP and house-and-lot or condominium units over 15,000,000 PHP. Sales by people selling capital assets (not in the real estate business) are typically exempt from VAT.

If VAT applies, it's charged on top of capital gains tax since they tax different aspects of the transaction.

Technically, sellers incur VAT, but it's usually built into the gross selling price and passed on to the buyer.

US tax requirements when selling property in the Philippines

The IRS requires all US citizens and residents to report income from anywhere in the world. This includes profit from selling your property in the Philippines, even if you don't live in the US anymore.

The fact that you must include the sale on your US tax return doesn't mean that you'll necessarily have to pay the US capital gains tax on it, too.

The US and the Philippines have a tax treaty in place, which can reduce or eliminate what you owe to the US. However, you still must report the sale to the IRS.

FATCA and FBAR reporting

When your foreign bank account balances or assets are over certain thresholds, there are other US reporting requirements you need to comply with:

• FBAR (FinCEN Form 114): Required if all your foreign accounts combined exceed 10,000 USD at any moment during the year⁴
• FATCA (Form 8938): Required when foreign financial assets exceed 200,000 USD at year-end or 300,000 USD at any point during the year (those amounts double to 400,000 USD and 600,000 USD for married couples filing jointly)⁵

Owning foreign property or keeping your real estate sale proceeds in your Philippine bank account can easily push you past these limits, so make sure to comply with the necessary filings.

You won't have to pay any tax, since these are just reporting requirements, but not filing these forms on time can trigger penalties or fees.

How to avoid double taxation when selling property in the Philippines

The US and the Philippines have a tax treaty that prevents you from paying taxes twice on the same income, including from real property sales.

For capital gains taxes, you can claim the Foreign Tax Credit on your US return.

After paying capital gains tax in the Philippines, you report that payment on your US tax return using Form 1116. The credit lowers your US tax bill by what you paid to Philippine authorities.

Since the Philippine rates (6% flat rate for capital assets, or up to 35% for ordinary assets) can match US capital gains rates, you may not owe any US capital gains tax at all. In the worst-case scenario, you'll just have to pay the difference instead of the full tax amount.

Special considerations

Non-resident vs resident tax implications

There are no major differences between residents and non-residents when it comes to real property taxes. Both pay the same capital gains tax rates, either the 6% flat rate for capital assets or progressive rates for ordinary assets.³

The biggest difference is that non-residents can't access certain exemptions, such as the principal residence exemption that lets you avoid capital gains tax when selling your main home. It's only available to Filipino citizens or residents.

Properties held through companies

Some American sellers own their Philippine property through a company, especially if they bought a house in the Philippines, which comes with certain restrictions that owning through a company allows you to work around.

In the Philippines, income and capital gains earned by companies are taxed at a flat rate of 25%.¹

On the US side, you'll face different reporting requirements and potentially different tax treatment depending on how your company is structured.

It's a good idea to get in touch with both a lawyer and a tax professional to make sure you comply with all requirements in both countries as you go through the sale.

Inherited property sales

The Philippines doesn't have an inheritance tax. However, an estate tax of 6% applies to the deceased person's total assets. As the heir, you'll need to pay this estate tax and complete all required legal steps before you can sell the property.⁶

Once you've settled the estate tax and transferred the title to your name, selling the property follows the same rules that apply to any other sale. You'll pay capital gains tax based on whether the property is a capital asset or an ordinary asset, plus all the other standard fees and costs.

What are the tax filing deadlines in the Philippines and the US?

Philippines tax deadlines

Here's when you'll have to pay taxes in the Philippines when selling property:³

• Capital gains tax must be paid within 30 days after the deed of sale is notarized
• Documentary stamp tax is due within 5 days after the end of the month in which the deed of sale was signed
• Local transfer tax deadlines vary by city or municipality, but payment is typically due within 60 days of notarizing the deed of sale

Your lawyer will keep you on track with these payment deadlines or handle them for you, depending on your arrangement.

US tax deadlines

You'll report your Philippine property sale on your US tax return. The standard filing deadline is April 15, but if you're living outside the US, you automatically get an extension until June 15 to file.⁷

Bottom line

Selling your property in the Philippines is a great way to make money on your investment, whether you were renting it out or living there.

But it's important to be aware of the taxes and other fees that come with this transaction. Capital gains tax alone takes 6% for most sellers, and when you add professional fees, stamp taxes, and other costs, they add up quickly.

What many sellers don't think about is that bank transfer fees and currency exchange rate markups can reduce your gains from the property sale even further.

Banks often hide markups in their exchange rates, sometimes 3% to 5% worse than the mid-market rate. On a large property sale, that can mean losing thousands of dollars just on the PHP to USD conversion.

It's smart to investigate alternatives, such as Wise.

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Sources

1. Global Property Guide - Philippines
2. PwC - Philippines
3. Esales International Property - Selling Property in Philippines Costs and Taxes
4. IRS - Report of Foreign Bank and Financial Accounts (FBAR)
5. Tax Samaritan - Owning a Foreign Property
6. PwC - Inheritance and gift tax rates
7. IRS - Frequently asked questions (FAQs) about international individual tax matters

Sources checked 12/04/2025