10% CAPITAL GAINS TAX

Finance Secretary Ralph Recto proposed revisions to the Senate's Passive Income and Financial Intermediary Taxation Act (PIFITA).

His proposal? An increase in capital gains tax from the current 6% to 10%, effective from 2025 to 2030.

What could this mean for the real estate market?

1. Impact on Sellers: Sellers' net proceeds will inevitably take a hit. While it’s common for sellers to pass on increased costs to buyers through adjusted selling prices, the current state of the real estate market suggests sellers might need to absorb the additional cost themselves.

2. Rush to Sell: Whether or not Congress approves this revision, expect a surge of sellers trying to offload properties in anticipation of higher taxes.

3. A Potential Silver Lining: The temporary nature of this increase might deter some property owners from selling until the tax reverts to 6% in 2030, potentially reducing supply and stabilizing prices in the interim.

How do you see these proposed changes playing out?

I couldn't find a copy of the proposal but you could find the article in Business World. Search: "recto pifita 300 bn").