Understanding BIR Zonal Value, Taxes, and the Complete Process

Buying your first property, selling a long-owned family home, or inheriting land from loved ones should feel exciting, not confusing. Yet for many Filipinos and foreign property buyers, land title transfer in the Philippines becomes overwhelming once taxes, paperwork, and unfamiliar terms like BIR zonal value comes in.

If you’ve ever asked, “Why is the tax so high?” or “Why is BIR using a different value than our selling price?”, you’re not alone.

In this updated 2025 guide, you’ll learn how land title transfer works, why BIR zonal value matters, how taxes are computed, and how to avoid costly delays or penalties. Whether you’re selling, buying, inheriting, or donating property, this guide will help you move forward with confidence. 

Why BIR Zonal Value Matters in Land Title Transfer

When transferring ownership, the Bureau of Internal Revenue (BIR) does not rely on selling price alone. Instead, three (3) values are used as tax bases:

• Actual Selling Price
• Fair Market Value (Assessor’s Office)
• BIR Zonal Value

The highest value becomes the basis for tax computation.

The BIR zonal value is the government’s benchmark for determining the fair market value of properties within specific zones or locations. A zonal value is the BIR’s official valuation of real property based on location, classification, and usage. Each area is assigned a BIR zonal value classification code, ensuring standardized valuation nationwide. It directly affects:

• Capital Gains Tax
• Documentary Stamp Tax
• Estate Tax
• Donor’s Tax
• Transfer Tax (LGU)

The BIR periodically updates these values to reflect real estate market movements, especially in fast-growing areas like Metro Manila, Cebu, and emerging business districts.

Failing to check the latest BIR zonal value before a Title Transfer can result in underpayment, penalties, or delayed issuance of your eCAR, a critical requirement for transferring titles at the Registry of Deeds.

How to Check Zonal Value in BIR?

There are several ways you can find the latest BIR Zonal value for your property. These are:

1. You may visit the BIR website, www.bir.gov.ph,  for the latest published zonal value. You’ll find municipality-specific files published for public reference under BIR gov ph zonal value releases.
2. You may visit your Local RDO Office Branch, which has jurisdiction over the property’s location, or you may contact BIR hotlines for assistance on finding the latest zonal values.
3. You may ask your consultants, such as licensed brokers, appraisers, lawyers, or trusted service providers like FileDocsPhil, who often have access to the latest BIR zonal values, saving you time and guesswork.

How Do You Calculate the Zonal Value of a Property?

To calculate zonal value:

1. Identify the zonal value per square meter for the property’s zone.
   
   
2. Multiply it by the total land or floor area.
   
   
3. Compare it with the selling price and the assessor’s fair market value.
   
   
4. Use the highest value for tax computation.

How to Compute Taxes Using BIR Zonal Value?

When you already have the zonal value, you can now compute various taxes by following steps:

Step 1: Identify the Applicable Tax:

• Capital Gains Tax: Imposed on the sale of a property, typically 6% of the highest value between the selling price, fair market value, or zonal value.
• Documentary Stamp Tax: It applies during the transfer of the property, along with other taxes like Capital Gains Tax and Transfer Tax.Typically 1.5% of the highest value.
• Estate tax: Levied on the transfer of the deceased person’s property to heirs, based on the property’s value at the time of death. Funeral expenses, medical expenses incurred within one year prior to death, family home allowance, standard deductions, claims against the estate, unpaid mortgages, and other allowable deductions can reduce the taxable estate. Typically 6% of the net estate value.
• Donors tax: Applies when property is transferred as a gift, calculated based on the fair market value or zonal value, whichever is higher. A flat rate of 6% is applied to the net gifts above the PHP 250,000 exemption.
• Transfer Tax: is a local government tax collected by the province or city where the property is located, and it is separate from other taxes such as the Documentary Stamp Tax (DST), Capital Gains Tax, or Donor’s Tax. The rate varies by locality, typically ranging from 0.5% to 0.75%. 0.5% for provinces and 0.75% for cities and municipalities within Metro Manila.

Step 2: Gather Relevant Values

• Selling Price: The actual sale price agreed upon by the buyer and seller.
• Fair Market Value: As determined by the local government assessor’s office.
• BIR Zonal Value: The BIR’s valuation for tax purposes.

Step 3: Compare Values

Use the highest value among the selling price, fair market value, or zonal value for tax computation.

Step 4: Calculate the Tax: Sample Tax Computation

Assuming you are dealing with a condominium unit in BGC, Taguig, with the following values:

• Selling Price: PHP 15,000,000
• Fair Market Value: PHP 14,500,000
• Zonal Value: PHP 205,000 (zv/sqm based on the latest BIR zonal value for that specific location in BGC) X 84 sqm = PHP 17, 220, 000

Highest Value: Zonal value of PHP 17, 220, 000

Capital Gains Tax (CGT)

Rate: 6% of the highest value.

Computation: PHP 17,220,000 x 6% = PHP 1,033,200.

Documentary Stamp Tax

Rate: 1.5% of the highest value.

Computation: PHP 17,220,000 x 1.5% = PHP 258,300.

Estate Tax

Rate: 6% of the net estate value.

Computation: PHP 17,220,000 (- PHP 700,000 total deductions if any) x 6% = PHP 991,200.

Donor’s Tax

Rate: 6% on the amount exceeding PHP 250,000.

Computation:

• Taxable amount: PHP 17,220,000 (- PHP 250,000 exemption) = PHP 16,970,000.
• PHP 16,970,000 x 6% = PHP 1,018,200.

Transfer Tax

Since Taguig is located within Metro Manila, the rate is typically 0.75%.

Computation: PHP 17,220,000 x 0.75% = PHP 129,150.

Take note that when computing estate or donor’s taxes, other factors such as deductions, exemptions, and other allowable reductions may apply, potentially altering the final tax due. For estate taxes, deductions such as family home, standard deductions, and medical expenses could lower the taxable estate value, and for donor’s tax, gifts within the exempt amount per calendar year are excluded. 

Each tax is specific to the type of transaction, and not all may apply at once. Always consult with a professional for accurate and detailed guidance, especially when dealing with significant sums or complex scenarios like estates and donations.

BIR Zonal Value and the Land Title Transfer Process

A successful land title transfer in the Philippines requires:

1. Correct tax computation using BIR zonal value.
2. Full tax payment.
3. Issuance of eCAR.
4. Submission to Registry of Deeds.
5. Updating local records, including Real Property Tax.

Any mistake, especially undervaluation, can delay the entire process for months.