Juan, a resident citizen, sold the following capital assets in 2020: a. House and lot in Nasugbu, Batangas for Php10,000,000. It cost him Php2,000,000 in 2010. b. Rest house in Tagaytay, Cavite for Php20,000,000 which cost him Php5,000,000 in 2012. c. Condominium unit in Los Angeles, California for Php15,000,000. He acquired the said property in 2013 for USD100,000. In 2013, the USD to Philippine peso exchange rate is USD1 = Php42. How much capital gains tax must Juan pay for the sale of his properties? A. Php2,700,000 B. Php1,380,000 C. Php2,028,000 D. Php1,800,000

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Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.