RA 12001 Is Replacing BIR Zonal Values With BLGF Schedules of Market Values — What It Means for CGT, DST, and Estate Tax

Republic Act No. 12001, the Real Property Valuation and Assessment Reform Act (RPVARA), is designed to replace BIR zonal values with a single, BLGF-approved Schedule of Market Values (SMV) for each locality — but this is a gradual, area-by-area rollout, not a single national switch-over date. Until an SMV is formally approved and adopted for a given property’s locality, capital gains tax, documentary stamp tax (DST), and estate tax still use the existing BIR zonal value framework as the tax base.

What is RA 12001 (RPVARA), and why was it passed? #

RA 12001, signed into law on June 13, 2024 and effective July 5, 2024, is meant to replace the country’s patchwork of overlapping property valuations — BIR zonal values, each local government unit’s own Schedule of Market Values, and the “highest of selling price, zonal value, or assessed value” comparison — with one uniform, internationally benchmarked valuation standard per locality. Before RPVARA, a single property could effectively carry three different valuation figures depending on which agency was asking: the BIR’s zonal value for national internal revenue taxes, the local assessor’s schedule for real property tax, and the parties’ own contract price. RPVARA’s stated goal is to collapse these into one Schedule of Market Values per locality, prepared by the local government, reviewed by the Bureau of Local Government Finance (BLGF), and approved by the Department of Finance (DOF) — used as the single valuation base for both national and local purposes going forward.

How does RPVARA change the tax base for CGT, DST, and estate tax? #

Once an SMV is approved and adopted for a locality, RPVARA directs that the internal revenue taxes that currently rely on the higher of BIR zonal value or assessed fair market value — capital gains tax, documentary stamp tax, estate tax, and donor’s tax on real property — use the approved SMV as the valuation base instead. This mirrors the “higher of” logic taxpayers already know from how BIR zonal value works today: the mechanism that stops parties from understating a deed’s consideration doesn’t disappear under RPVARA, it is simply rebuilt around a single, updated SMV figure per locality rather than a separately maintained zonal value table.

The law includes a saving clause for the transition: existing BIR zonal values and each LGU’s existing Schedule of Market Values remain valid and continue to apply for computing internal revenue tax until they are repealed or superseded by an approved SMV under RPVARA. Where an area’s SMV is not yet available or approved, the Commissioner of Internal Revenue is directed to use the existing SMV, the existing zonal value, or the actual consideration stated in the transaction documents — whichever is highest — exactly as before.

Is the zonal-value system gone already, or still in effect? #

As of this writing, BIR zonal values have not been nationally replaced — the transition is proceeding locality by locality, and multiple industry groups are actively pushing to slow it down further, so no property seller should assume their area has already converted without checking. RPVARA’s implementing rules and regulations (IRR) were approved by the DOF in December 2024, and the BLGF issued its own implementing memorandum circular in early 2025, giving local government units a window — up to two years from the law’s effectivity — to prepare and submit updated Schedules of Market Values for BLGF review and DOF approval. That window falls around mid-2026, but the rollout depends on each LGU actually completing and submitting its SMV, and reporting in September 2026 describes industry groups requesting the government push the reform’s practical start considerably further out, citing readiness concerns. Given that live pushback, this post deliberately does not assert a hard national date on which BIR zonal values stop applying — a taxpayer should confirm the current status directly with the RDO or BLGF office covering the specific property’s locality before relying on either the old zonal value or a newer SMV figure.

Worked example: two localities, two valuation bases #

The same ₱5,000,000 sale price can produce a different BIR Form 1706 capital gains tax computation depending on whether the property’s locality is still on the old zonal value table or has an approved SMV in effect — the mechanics below are illustrative, not a claim about any specific LGU’s actual status.

The point of the example is mechanical, not predictive: because an SMV is meant to reflect more current market conditions than a zonal value table that may not have been revised in years, a locality’s conversion to an approved SMV can raise the controlling valuation — and therefore the tax due — even when the contract price stays exactly the same. A seller who assumes their RDO’s old zonal value still controls, without confirming current status, risks underpaying if that locality has since converted.

What should a taxpayer do to prepare? #

Because the SMV rollout is uneven across the country, the safest approach before filing a real property transaction’s BIR Form 1706, BIR Form 2000-OT, or an estate tax return is to confirm the current valuation status for that specific locality rather than defaulting to whichever figure was used on a prior transaction.

• Ask the RDO handling the property’s location whether an approved SMV is already in effect for that specific city, municipality, or barangay, or whether the existing BIR zonal value still applies.
• Do not assume a neighboring locality’s conversion status applies to the property in question — the rollout is LGU-by-LGU, not regional.
• Keep both the old zonal value figure and any newly approved SMV figure on file for the transaction period, in case the BIR requests supporting documentation for the valuation used.
• Revisit this status again closer to the actual filing date if there is any lag between the deed of sale and the tax return, since an SMV can be approved for a locality in the interim.

Summary #

RA 12001 (RPVARA) is designed to eventually replace BIR zonal values with a single BLGF-approved Schedule of Market Values per locality, but as of this writing that replacement is a gradual, LGU-by-LGU rollout rather than a completed national switch-over — existing zonal values remain the valid tax base for capital gains tax, DST, and estate tax under the law’s own saving clause until a locality’s SMV is formally approved and adopted. Given active industry requests to extend the transition timeline further, a taxpayer preparing a real property filing should confirm the specific locality’s current valuation status with the RDO or BLGF rather than assuming either the old zonal system or a new SMV automatically applies. For how the existing zonal value mechanism works in the meantime, see What Is BIR Zonal Value? How It Sets the Minimum Tax Base for Capital Gains Tax, DST, and Estate Tax, and for how zonal value interacts with donor’s tax when a property sells below it, see Selling Below Zonal Value: When It’s Treated as a Deemed Gift for Donor’s Tax.

Sources #

Primary sources

• Republic Act No. 12001, the Real Property Valuation and Assessment Reform Act (RPVARA), signed June 13, 2024, effective July 5, 2024 — citation of record. The law’s own PDF and its saving/transitory clauses were not independently fetched in full in this research session; the transition mechanics above are corroborated across the secondary sources below.
• Bureau of Local Government Finance — Memorandum Circular No. 001-2025, implementing rules and regulations of RA No. 12001 (approved January 2025).

Secondary sources

• Siguion Reyna, Montecillo & Ongsiako — Understanding Republic Act No. 12001 or the Real Property Valuation and Assessment Reform Act of 2024 (RPVARA)
• Grant Thornton Philippines — The Reformation of Real Property Valuation: Insights on the RPVARA and its implementing Rules and Regulations
• Municipality of Itogon — EXPLAINER ON RPVARA: Real Property Valuation and Assessment Reform Act
• BusinessMirror — PSAC seeks longer transition in implementation of RPVARA (September 26, 2026 — used to confirm the transition is not yet complete and is actively contested)
• Philstar.com — PSAC seeks 4-year delay in property valuation reform