I'm Giancarlo Enrico S. Pozon, a Wushu instructor, investor and Barrister... That's right, Barrister; I graduated from law school and took the Bar Exams, now I'm waiting for the results. I created this blog to make Philippine Law easy to understand for the average person. It's all about free legal advice. There are many law blogs. But the problem is that many of them are written for lawyers and law students. They use words that can't be understood by ordinary people.
Many lawyers, judges and law students consider themselves as superior to most human beings because of their knowledge of the law. It bothers me since the law is supposed to serve society. Since the law is meant to serve society as a whole, it is important that is must be understood by everybody.
This does not mean that we should all become lawyers. It means that although law is a highly specialized profession, the first duty of everybody in this profession is to make the law understandable to all; that's why all these articles are free legal advice.
Like I said, this blog is about law -but it's for the ordinary people, not the lawyers. It's for the ordinary folk so they will know what is good and bad for them, and that making them aware of the law will help us all improve society as a whole. This is free legal advice for everybody!
1.) Sale of personal property by a dealer
2.) Casual sale of personal property, provided:
a.) The selling price is more than Php1,000.00;
b.) Initial payments don't exceed 25% of the selling price; and
c.) The property sold isn't the kind that will be included in the inventory if on hand at the end of the taxable year
3.) Sale of real property, provided the initial payments don't exceed 25% of the selling price
The income from these sales can be reported using the installment method.As a consequence, these capital gains taxes can also be paid in installments:
1.) Final capital gains tax from the sale of real property (capital asset,) provided that the initial payments don't exceed 25% of the selling price
2.) Final tax on net capital gains from installment sales of shares of stock not listed and traded in the stock exchange, provided that the initial payments don't exceed 25% of the selling price
The formula for computing the final tax due in both is here:
Final Tax Due = Installments Received x Final Tax
Contract Price
The tax base for the formula is the net capital gain. The rate is 5% if the gain is not more than Php100,000.00 and 10% if more than Php100,000.00.
Installment sales of capital assets can also be subjected to the holding period rule (see Net Capital Gains Tax and Final Capital Gains Tax) Remember, however, that the holding period won't apply to capital assets subject to a final capital gains tax (real property and shares of stock listed and traded in the stock exchange.) The holding period applies only to those capital gains and losses that must be reported in the ITR.
Deferred-Payment Sale
This is a sale where the payments received in cash or property other than evidence for the purchaser's indebtedness during the taxable year when the sale is made exceeds 25% of the selling price. The income of such a sale can't be reported in installments. The obligations the vendor receives from the purchaser are considered as the equivalent of cash; so the tax shall be paid in full in the year of sale.
"Initial payment" means downpayment and all payments within the year of the sale
"Initial payment" means downpayment and all payments within the year of the sale
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