On August 31, 2022, Jackie agreed to purchase a parcel of land for P1,000,000 which the seller considered as a capital asset. The deed of absolute sale, however, was processed and dated on September 15, 2022. The land was valued at the following: Appraised value - 1,200,000 Zonal value - 900,000 Assessor's value - 800,000 Seller's tax basis - 500,000 How much is the capital gains tax?

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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.