BIR Form 1707 vs BIR Form 1706: Which Capital Gains Tax Return Applies?

A taxpayer disposing of a capital asset for a gain files one of two final capital gains tax returns depending entirely on what was sold: BIR Form 1706 for real property, BIR Form 1707 for unlisted shares of stock. Both are one-time-transaction (ONETT) filings due within 30 days, both impose a final tax with no further income tax owed on the same gain, and both are frequently confused with each other because they serve the same broad purpose — yet using the wrong form or the wrong tax base produces a materially wrong liability.

This guide puts the two side by side. For the full detail on each individually, see BIR Form 1706: How to File Capital Gains Tax on Sale of Real Property and BIR Form 1707: Capital Gains Tax Return for Sale of Shares of Stock.

BIR Form 1706 vs BIR Form 1707 at a glance #

The asset being disposed of — not the seller’s identity, intent, or the size of the transaction — determines which form applies. Real property, whether land, a house, or a condominium unit held as a capital asset, always uses Form 1706. Shares of stock in a domestic corporation that never traded through the local stock exchange always use Form 1707. Nothing else changes that assignment.

Why the tax base difference matters more than the rate difference #

Form 1707’s 15% looks steeper than Form 1706’s 6% on paper, but the two rates apply to fundamentally different bases, so the higher rate does not automatically mean a bigger bill. Form 1706 taxes the gross transaction value — the seller gets no credit for what they originally paid for the property, so even a property sold at a loss relative to acquisition cost still owes 6% of the selling price or zonal value, whichever is higher. Form 1707 taxes only the net gain after subtracting cost basis, so a seller who barely breaks even on a share sale may owe very little 15% tax, while a seller who bought the shares for a nominal amount years ago and sells at a large markup pays the full 15% on nearly the entire proceeds.

Worked example — same ₱2,000,000 transaction value, two different assets:

In this example the two happen to land on the same peso amount, but that is coincidental — change the share seller’s cost basis to ₱1,900,000 instead of ₱1,200,000, and the Form 1707 tax drops to ₱15,000 (15% of a ₱100,000 gain) while the Form 1706 tax on the property sale stays fixed at ₱120,000 regardless of what the seller originally paid.

What happens if you file the wrong form? #

Filing BIR Form 1706 for a share sale, or Form 1707 for a real property sale, does not merely use the wrong template — it computes tax on the wrong base entirely, since the two forms don’t share a tax-base formula. In practice, an RDO examiner reviewing a mismatched filing will require the correct form to be filed and the difference settled, plus the standard NIRC Section 248 surcharge and Section 249 interest for whatever portion was underpaid or filed late as a result of the correction. There is no scenario where a single transaction is properly reported on both forms, or where either form substitutes for the other.

Frequently asked questions #

What is the difference between BIR Form 1706 and BIR Form 1707? #

BIR Form 1706 is the Capital Gains Tax Return for selling real property classified as a capital asset, taxed at 6% of the highest of gross selling price, zonal value, or assessed value. BIR Form 1707 is the Capital Gains Tax Return for selling shares of stock in a domestic corporation not traded on the local stock exchange, taxed at 15% of net capital gain. They apply to different asset classes and compute tax on entirely different bases.

Do I file BIR Form 1706 or 1707 for selling my family home? #

BIR Form 1706 applies to a family home sale, since real property is the asset being disposed of. BIR Form 1707 only applies when the asset transferred is shares of stock in a domestic corporation, not real property — a residential lot, house, or condominium sale never uses Form 1707 regardless of the seller’s relationship to the property.

Which return has the higher tax rate, 1706 or 1707? #

BIR Form 1707 has the higher nominal rate at 15%, versus 6% for BIR Form 1706 — but the two are not directly comparable because they apply to different tax bases. Form 1706’s 6% applies to the full selling price (or higher zonal/assessed value) with no deduction for cost, while Form 1707’s 15% applies only to the net gain after subtracting the seller’s cost basis.

Are both BIR Form 1706 and 1707 due within the same number of days? #

Yes. Both returns are due within 30 days of the transaction — for Form 1706, 30 days from the notarized Deed of Sale; for Form 1707, 30 days from the sale, barter, exchange, or other disposition of the shares. Missing either deadline triggers the same NIRC Section 248 surcharge and Section 249 interest.

Is there an annual version of either return? #

BIR Form 1707 has an annual counterpart, BIR Form 1707-A, which consolidates all of a taxpayer’s unlisted-share transactions for the year and is due on or before the 15th day of the fourth month after the taxable year closes. BIR Form 1706 has no separate annual consolidation return — each real property sale is reported and closed out on its own 30-day cycle.

Summary #

Asset type decides the form: real property always uses BIR Form 1706 at 6% of the highest of selling price, zonal value, or assessed value; unlisted domestic shares always use BIR Form 1707 at 15% of net capital gain. Both are due within 30 days of the transaction, but the different tax bases mean the higher 15% rate does not automatically produce a bigger bill than the 6% rate. See BIR Form 1707-A for the annual filing that share sellers still owe on top of each per-transaction 1707.