Why is my house and lot classified as Capital Asset and subject to Capital Gains Tax (CGT)? Under the NIRC, capital assets refer to property held by the taxpayer, whether or not connected to his trade or business, but do not include the following: 1. Stock in trade; 2. Other property of a kind which would properly be included in the inventory of the taxpayer if on hand at the close of the taxable year; 3. Property primarily held for sale to customers in the ordinary course of business or trade; 4. Property used in the trade or business or a character which is subject to allowance for depreciation; 5. Property used in trade or business of the taxpayer. Since your property does not fall in any of the foregoing category, it is classified as capital asset and therefore subject to Capital Gains Tax. What property are classified as ordinary assets? Ordinary assets refer to the following types of property: 1. Stock in trade; 2. Other property of a kind which would properly be included in the inventory of the taxpayer if on hand at the close of the taxable year; 3. Property held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business; 4. Property used in the trade or business or a character which is subject to the allowance for depreciation; 5. Property used in trade or business of the taxpayer.
Posted on: Sat, 08 Mar 2014 12:49:07 +0000
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