A seller’s net proceeds are the selling price minus every tax, fee, and cost the transaction triggers — not the price printed in the deed of sale. On a typical Philippine capital-asset sale that means subtracting the 6% capital gains tax, 1.5% documentary stamp tax, up to 0.75% local transfer tax, an LRA registration fee that changes by circular, any broker’s commission, and whatever mortgage balance is still outstanding, all computed against the higher of the selling price or the property’s official fair market value (National Internal Revenue Code, as amended, LawPhil). Sellers who quote a “net” figure before running these numbers are usually the ones surprised at the notary’s table.
Decision Snapshot
- What this is: A step-by-step formula for what a seller actually receives after a Philippine property sale — not a single published number, since several of the inputs are transaction-specific or revised periodically by regulation.
- Where the numbers come from: Your BIR-computed capital gains tax and documentary stamp tax, the city or municipal treasurer’s transfer tax assessment, the Registry of Deeds’ current registration fee (via the LRA’s ERCF tool), and whatever your contract says about commission and other negotiated costs.
- The key qualifying detail: This formula assumes a capital asset sale by a private seller. A seller who is a real estate dealer, developer, or otherwise “habitually engaged” swaps capital gains tax for VAT or percentage tax, which changes the whole stack — see the ordinary-asset comparison below.
- The main rates involved: 6% capital gains tax and 1.5% documentary stamp tax (both BIR, both on the higher of price or fair market value), plus up to 0.5%–0.75% local transfer tax, an LRA registration fee set by circular, and a broker’s commission that is negotiated, not fixed by law.
- An important caveat: The “fair market value” that several of these taxes reference is being phased into a new unified Schedule of Market Values under Republic Act No. 12001, which can shift your tax base independently of your asking price.
- Next step: Build your own total using the formula and checklist below before you price the property, accept an offer, or promise a family member or lender a specific take-home figure.
Why “Selling Price” and “What You Keep” Are Different Numbers
A property listed at ₱5,000,000 does not put ₱5,000,000 in the seller’s pocket. Two national taxes, one local tax, one government registration fee, and typically a commission all come out of that figure before a peso reaches the seller’s bank account — and if there’s still a mortgage on the property, the payoff comes out too. None of these are optional line items a seller can skip by agreement; the BIR will not issue the electronic Certificate Authorizing Registration (eCAR) needed to transfer title until its taxes are paid, and the Registry of Deeds will not register the new title until the local transfer tax and its own fee are settled as well (see our guide to the eCAR process).
The confusion usually comes from a different but related question: who pays which cost is a matter of custom and contract, while how much each cost is is mostly fixed by law or regulation. Our companion guide on who pays which closing costs covers the allocation question. This guide assumes the seller bears the items sellers conventionally bear — capital gains tax, broker’s commission, and their own unpaid dues — and walks through how to size each one.
The Net Proceeds Formula
At its simplest, a seller’s net proceeds follow one equation:
Net proceeds = Selling price − Outstanding mortgage payoff − Capital gains tax − Documentary stamp tax − Local transfer tax (if seller-paid) − Registry of Deeds registration fee (if seller-paid) − Broker’s commission − Other negotiated or unpaid costs
Working through that formula honestly takes four steps, in this order, because each step depends on the one before it:
- Confirm your tax base — the figure the government taxes you on, which is not always your asking price.
- Compute the fixed-rate national and local taxes that apply to a capital-asset sale.
- Get a current figure for the variable government fee — the Registry of Deeds registration fee — rather than guessing at it.
- Add negotiated costs — commission, notarial fees, unpaid dues — that are not set by any statute.
Step 1: Confirm Your Tax Base
Capital gains tax, documentary stamp tax, and (in most cases) the local transfer tax are not computed on whatever price the buyer and seller privately agree to. Each is computed on the higher of: the gross selling price stated in the deed, the BIR zonal value for the property’s location, or the local assessor’s fair market value shown on the tax declaration. A seller who prices below the zonal value doesn’t reduce their tax bill — the BIR simply taxes the zonal value instead. Before estimating any of the taxes below, pull the current zonal value from the BIR and the assessed fair market value from the local assessor’s office, and compare both against your asking price.
Step 2: The Taxes That Come Off the Top
For a capital-asset sale by a private individual or a non-dealer corporation, three government charges apply on top of that confirmed tax base, each computed and paid separately:
| Charge | Rate | Collected by | Legal basis |
|---|---|---|---|
| Capital gains tax (CGT) | 6% of the higher of selling price, zonal value, or assessor’s FMV | BIR | Sec. 24(D) NIRC (individuals) / Sec. 27(D)(5) NIRC (corporations), as amended |
| Documentary stamp tax (DST) | 1.5% (₱15 per ₱1,000) of the same tax base | BIR | Sec. 196, NIRC, as amended by RR No. 4-2018 |
| Local transfer tax | Up to 0.5% (province) or up to 0.75% (city / Metro Manila) of the same tax base | City or Municipal Treasurer | Sec. 135, Local Government Code (RA 7160) |
CGT and DST are both due within 30 days of the deed’s notarization and must clear before the BIR issues the eCAR; the local transfer tax is generally due within 60 days of execution and must clear before the Registry of Deeds accepts the deed. See our full guides to capital gains tax, documentary stamp tax, and local transfer tax for the full computation rules, exemptions, and filing deadlines behind each figure.
Philippine tax law also provides a conditional exemption from CGT when a natural person sells their principal residence and fully reinvests the proceeds in a new principal residence within the statutory period and BIR requirements — this does not apply to an investment unit, a rental property, or a second home, and it requires prior BIR notice and an escrow of the tax, so don’t assume it into your net proceeds estimate without confirming eligibility first.
Step 3: The Government Fee You Can’t Fix in Advance
The Registry of Deeds charges its own registration fee, separate from BIR and local government taxes, to record the deed and issue a new title. It is computed on a tiered schedule under Section 111 of the Property Registration Decree (Presidential Decree No. 1529, Supreme Court E-Library), and the bracket amounts are revised periodically by LRA circular — most recently touched by Circular No. 06-2025. There is no single current peso figure that stays accurate for long enough to print here responsibly. Run your specific transaction value through the LRA’s own Estimate Registration Computation Fees (ERCF) tool, or ask the cashier at the Registry of Deeds with jurisdiction over the property, and treat that number — not any fixed percentage — as the correct input for your net proceeds calculation. For the full registration process and what changed recently, see our Registry of Deeds fees and process guide.
Step 4: Broker’s Commission and Other Negotiated Costs
Unlike the taxes above, a real estate broker’s commission in the Philippines is not set by law. The Real Estate Service Act (Republic Act No. 9646) licenses and regulates who may practice as a broker; it does not fix what a broker may charge, which is instead a matter of contract between broker and client. Industry sources report a market-customary range of roughly 3%–5% of the gross selling price for residential resale transactions, and around 5% for raw land, though any specific rate should be confirmed in your signed listing or service agreement rather than assumed (REN.PH, Real Estate Commission Calculations). A seller who lists without a broker skips this cost entirely but takes on the marketing, screening, and negotiation work themselves.
Beyond commission, a seller’s net proceeds calculation should also account for costs that are real but not standardized enough to quote as a fixed percentage:
- Notarial fees for the deed of sale, set per notary and often negotiable — get a quote before closing rather than estimating.
- Unpaid real property tax, association dues, or utility balances that must be cleared before the buyer or condominium corporation will issue a clearance.
- A new tax declaration fee at the city or municipal assessor’s office, the final step after title transfer.
- Legal or accounting fees if you engage a lawyer or accountant to review the contract or compute your tax exposure — money well spent on a transaction this size, but not a government-set amount.
If the Property Is an Ordinary Asset, the Whole Stack Changes
Everything above assumes the seller is disposing of a capital asset — property not used in a trade or business and not held for sale in the ordinary course of business. A seller who is a real estate dealer, developer, or lessor “habitually engaged” in real estate (registered with the DHSUD, or with at least six taxable real estate sales in the preceding year) is instead selling an ordinary asset, and capital gains tax does not apply at all:
| Capital asset (this guide) | Ordinary asset | |
|---|---|---|
| Income tax on the sale | Flat 6% capital gains tax | Regular income tax on net gain, or creditable withholding tax on the price |
| Consumption tax | None | 12% VAT (if VAT-registered/registrable) or 3% percentage tax, unless exempt |
| Documentary stamp tax | 1.5%, applies either way | 1.5%, applies either way |
| Local transfer tax | Applies either way | Applies either way |
If that describes your situation, do not use the capital-asset math above. See our guide to capital asset vs ordinary asset classification for the correct framework, since the tax component of your net proceeds calculation will be materially different.
2026 Update: Your Tax Base May Be Moving Under RA 12001
Republic Act No. 12001, the Real Property Valuation and Assessment Reform Act, is phasing in a single, unified Schedule of Market Values (SMV) per local government unit to eventually replace the separate, often outdated BIR zonal values and local assessors’ fair market values that CGT, DST, and (per LRA Circular No. 06-2025) in some cases the registration fee itself are based on (Republic Act No. 12001, Supreme Court E-Library). LGUs are adopting their new SMVs on a rolling basis through 2026, not all at once, so the applicable fair market value for a given property can change mid-year even if nothing about the property itself changes. Because every tax in Step 2 above is computed on the higher of your selling price or this official value, a jurisdiction’s SMV rollout can raise your tax base — and lower your net proceeds — independently of what you negotiate with a buyer. Confirm the currently effective valuation for your specific property’s location before finalizing a net proceeds estimate; our BIR zonal value guide covers this transition in more detail.
Worked Example: A Hypothetical ₱5,000,000 Condo Sale
The figures below are a hypothetical illustration only — not a real transaction, not current rates guaranteed to apply to your property, and not tax or legal advice. They show how to apply the formula, not what any specific sale will net.
- Facts: A private individual sells a Metro Manila condo unit — a capital asset — for ₱5,000,000. The BIR zonal value and assessor’s FMV are both lower than the selling price, so ₱5,000,000 is the tax base. An outstanding mortgage balance of ₱1,000,000 must be paid off at closing, and the seller has engaged a broker at a negotiated 5% commission.
- Capital gains tax: 6% × ₱5,000,000 = ₱300,000.
- Documentary stamp tax: 1.5% × ₱5,000,000 = ₱75,000.
- Local transfer tax: Assume the city rate is the 0.75% ceiling and the seller has agreed to shoulder it: 0.75% × ₱5,000,000 = ₱37,500.
- Broker’s commission: 5% × ₱5,000,000 = ₱250,000.
- Mortgage payoff: ₱1,000,000.
- Subtotal before registration fee and minor costs: ₱5,000,000 − ₱300,000 − ₱75,000 − ₱37,500 − ₱250,000 − ₱1,000,000 = ₱3,337,500.
- Still to subtract: The LRA registration fee for this transaction (get this from the ERCF tool), notarial fees, any unpaid dues, and a new tax declaration fee — each a real cost, none large enough on a transaction this size to be the difference between profit and loss, but each one that trims the final number further.
- The takeaway: On this hypothetical ₱5,000,000 sale, taxes, commission, and mortgage payoff alone already consume roughly a third of the gross price before a single peso of registration or professional fees is added — which is exactly why quoting a “net” figure before running this math is how sellers end up disappointed at closing.
What to Verify Before You Rely on This
- Confirm your tax base against the current BIR zonal value and assessor’s fair market value, not just your asking price — and check whether your LGU has already adopted a new RA 12001 Schedule of Market Values.
- Confirm the property’s classification as a capital or ordinary asset before assuming the 6% capital gains tax framework applies at all.
- Get a current LRA registration fee estimate through the ERCF tool or the specific Registry of Deeds handling your transaction — never from an older article’s fixed figure, including this one.
- Check your loan payoff statement with your bank or Pag-IBIG for the exact outstanding balance and any prepayment fee, not an estimate from your last statement.
- Get your commission rate in writing in a signed listing or service agreement rather than relying on a verbally quoted percentage.
- Ask whether you qualify for the principal-residence CGT exemption before you assume you owe the full 6% — but do not assume eligibility without BIR confirmation and the required reinvestment.
- Have a licensed accountant or tax lawyer review your specific numbers before you sign a contract to sell or promise anyone a specific take-home amount.
Frequently Asked Questions
Is net proceeds the same as capital gain?
No. Capital gain is a tax concept — under the 6% capital gains tax regime, the tax is computed on the selling price or fair market value regardless of whether the seller actually profited on the property. Net proceeds is a cash-flow concept: what the seller physically receives after every tax, fee, payoff, and cost is subtracted from the selling price. A seller can owe capital gains tax on a sale even if their net proceeds, after mortgage payoff and costs, amount to very little.
Who typically pays the capital gains tax, buyer or seller?
The law makes the seller liable for capital gains tax. In practice, some contracts shift this cost to the buyer through the pricing or an explicit clause, but that is a matter of negotiation, not a change in who the BIR holds legally responsible. See our guide on who pays which closing costs for how this is usually allocated.
Can I use my selling price as the tax base if it’s lower than the zonal value?
No. Capital gains tax, documentary stamp tax, and generally the local transfer tax are all computed on the higher of the selling price, the BIR zonal value, or the assessor’s fair market value. Pricing below the official value does not reduce these taxes — it only reduces what the buyer pays you.
Is broker’s commission legally capped in the Philippines?
No. The Real Estate Service Act (RA 9646) licenses and regulates brokers but does not fix their commission, which is set by agreement between broker and client. Reported market-customary ranges are roughly 3%–5% for residential resale, but the only rate that matters for your transaction is the one in your signed agreement.
Do I still owe capital gains tax if I sell at a loss?
Generally yes. Because the 6% capital gains tax is computed on the selling price or fair market value rather than on actual profit, a seller can owe the tax even on a sale that produces little or no economic gain, or even a loss relative to the original purchase price. This is one of the most counterintuitive features of the regime for first-time sellers.
How much should I budget for the Registry of Deeds registration fee?
There is no fixed percentage to apply. The fee follows a tiered schedule under Section 111 of the Property Registration Decree that the LRA revises by circular, so the only reliable figure is the one generated by the LRA’s own ERCF tool for your specific transaction value, or a computation from the assessing Registry of Deeds.
Does an outstanding mortgage reduce my taxes as well as my proceeds?
No. An outstanding mortgage balance reduces what you receive in cash at closing, but it has no effect on capital gains tax, documentary stamp tax, or local transfer tax, all of which are computed on the selling price or fair market value regardless of any lien against the property.
Does this formula apply to selling a lot, a house-and-lot, or a condo unit?
Yes, the capital-asset framework and formula are the same across property types, provided the seller is a private individual or non-dealer entity disposing of a capital asset. The main variable that changes by property type is which valuation — the BIR zonal value schedule for the specific classification, or the assessor’s fair market value — applies as the comparison point.
What to Do Next
Before you price your property or accept an offer, pull the current BIR zonal value and assessor’s fair market value for your specific address, confirm whether your property is a capital or ordinary asset, and run your transaction through the LRA’s ERCF tool for a real registration fee estimate. Get your loan payoff statement from your bank and your commission rate in writing from your broker, then work through the formula above line by line rather than estimating a round “net” number. Once you have real figures for every line item, have a licensed accountant confirm the total before you sign a contract to sell.
Figures in this article reflect the National Internal Revenue Code as amended, Revenue Regulations No. 4-2018 (documentary stamp tax), the Local Government Code (RA 7160), the Property Registration Decree (PD 1529), and Republic Act No. 12001 (Real Property Valuation and Assessment Reform Act), current as of September 21, 2026. Reported commission ranges reflect market practice, not a government-set rate. Registration fees, valuation schedules, and tax thresholds can change; this article does not substitute for a computation by the BIR, the assessing Registry of Deeds, or a licensed Philippine accountant or lawyer on your specific transaction.
