Hi all...I have a question regarding capital gains tax in the Philippines. When we bought our land, the seller wanted us as the purchaser to pay their capital gains tax and could not understand my reluctance or why they should pay it....after much explaining that they the seller are the ones gaining capital the tax is designed for them....finally they got it with much reluctance... Anyway we bought the land and proceeded to build a house on it. We are now in a position where we may want to sell due to change of circumstances. The capital gains tax is a rather bitter pill to swallow and can’t really understand the reasoning if the property is your sole residence, as in the U.K. you do not pay tax on a property sale if you live in it. If I understand correctly the capital gains tax does not apply if the house or building is used for commercial purposes which includes rental and classed as an ordinary asset hence not requiring capital gain tax upon sale. See rule below In the case of taxpayer not engaged in the real estate business, real properties, whether land, building, or other improvements, which are used or being used or have been previously used in trade or business of the taxpayer shall be considered as ordinary assets. [Sec. 3(b) of RR No. 7-2003] At present we are not living in the property and back in the U.K. but have a family member living there paying a small monthly rent. If this is the case could we class the property as a rental and if we sold it as such could we avoid the tax? I hope I’ve made my thoughts understood. If you have any other suggestions or work around to minimise tax I’m all ears.