Land sale in Cebu Philippines

6 Replies

Hello BP,

My in-laws and a few relatives own 10 hectares on virgin beach land in Cebu Philippines. They are looking to sell. They were born in the Philippines and are living in the US as American citizens. The question that they have is how the sale of the land will be taxed and if there will be any issues with the sale monies transferring to the US? Are there limitations or restrictions? Trying to assist them with the process. Thanks. Any insight or information would be greatly appreciated.

Usually for the seller's account it's 6% capital gains tax on the land sale, unpaid RE tax if any, and 3% broker's fees. Fund transfer fees to the US will depend on the remittance service used.

@Mark Futalan real estate is taxed as 6% of gross sales price. As US citizens the US will tax them based on US tax law which would be long term capital gains. they would be able to claim the 6% paid to the Philippines as a tax credit against US taxes

@Jason Lam

Thank you for the information. So there is no limit on the sale monies transfer to the US? And to be clear, they will need to report the sale on US tax returns but can get credit from the 6% paid in Philippines?

@Mark Futalan

There are considerable tax considerations for US citizens that do business in a foreign country.

If they have more than $10,000 value of currency in a foreign country, they may be required to report it to the US government on an annual basis. Therefore, if they sell the property and the funds are deposited in a Philippines Bank, they would be subject to this requirement.

They may be required to pay taxes to the Philippines government for this sale. However, the IRS may provide a foreign tax credit for taxes paid to another country.

@Basit Siddiqi

Hi Basit. Yes they have a Philippines bank account and will most likely be depositing it to that account initially. They would then like to transfer that monies to their bank account here in the US. The amount is substantial and would most likely be over the 10k. So I assume they would pay Philippine tax on the sale. Would they have any issue transferring those monies to the US? Would you happen to have an idea on how those monies are taxed here? They live in CA and the other in NJ. Thanks