Zonal value meaning in the Philippines: what the BIR's value is and when it counts
What zonal value means under Section 6(E) of the Tax Code, how it differs from the assessor's market value, and which taxes use the higher of the two.
Zonal value is the value the Bureau of Internal Revenue puts on real property in each zone or area of the country. It is a tax value. The BIR uses it as the lowest value a property can have when a tax on selling, donating or inheriting it is computed. It is not what a buyer will pay and not what a bank will lend against.
This guide is read from the National Internal Revenue Code of 1997 as amended by the TRAIN law of 2017. No zonal value itself is printed here, because this site carries no peso figures. The relevant sections are kept in this site’s records with the source of each.
Where zonal value comes from
Section 6(E) of the Tax Code, as rewritten by Section 4 of RA 10963 (TRAIN), authorises the Commissioner of Internal Revenue to divide the country into zones or areas and to set the fair market value of real property in each. That value is what people call the zonal value. The law attaches conditions to it:
| What the law requires | Where |
|---|---|
| Mandatory consultation with competent appraisers from the private and public sectors | Section 6(E), as amended by RA 10963 Section 4 |
| Prior notice to the affected taxpayers | Same |
| Automatic adjustment once every three years, through rules issued by the Secretary of Finance based on current Philippine valuation standards | Same |
| No adjustment is valid unless published in a newspaper of general circulation in the province, city or municipality, or, where there is none, posted in the provincial capitol, city or municipal hall and two other conspicuous public places | Same |
| The basis of any valuation, including the records of the consultations, is a public record open to any taxpayer’s inquiry | Same |
Zonal value and the assessor’s market value
Two government offices value the same lot.
- The BIR sets the zonal value under Section 6(E), for national internal revenue taxes.
- The provincial or city assessor keeps a schedule of market values, used for the real property tax the local government collects. That value appears on the tax declaration.
Section 6(E) settles which one counts for a national tax: “the value of the property shall be, whichever is the higher of” the fair market value set by the Commissioner, or the fair market value in the schedule of the provincial and city assessors.
So when someone asks which is higher, the law’s answer is that it does not matter in advance. The higher of the two on the day is the floor for the tax.
Which taxes use it
| Tax | What the law takes as the value | Where |
|---|---|---|
| Capital gains tax on selling land or a house held as a capital asset | The gross selling price or the current fair market value under Section 6(E), whichever is higher | Section 24(D)(1) |
| Documentary stamp tax on a deed of sale, conveyance or donation of real property | The consideration in the deed or the fair market value under Section 6(E), whichever is higher; the actual consideration when the government is a party | Section 196, as amended by RA 10963 |
| Estate tax | The higher of the Commissioner’s fair market value and the assessor’s schedule, as of the time of death | Section 88(B) |
| Donor’s tax on a gift of real property | Valued under Section 88(B), at the time of the gift | Section 102 |
The rates themselves are in those sections and change with amendments, so they are not repeated here.
Can a property be sold below its zonal value?
Yes. Nothing in the Tax Code stops two people agreeing on a lower price. What changes is the tax: the capital gains tax and the documentary stamp tax are computed on the higher figure, so a deed showing a price below the zonal value does not lower either tax. Section 196 also lets the revenue officer assess the true market value when the stated consideration has been understated. The deed of absolute sale guide covers the deed itself.
How to find the zonal value of a lot
Ask the BIR revenue district office that covers the lot for the schedule that applies. Under Section 6(E) every adjustment has to be published in a local newspaper or posted at the capitol or the city or municipal hall, so the local government is another place to look. A lot’s tax declaration names its barangay and classification, which helps match it to the right line. The codes used in the BIR’s schedules for each land classification are set in the BIR’s own issuances, which this site has not read, so they are not explained here.
Why it matters before you buy or build
- Before buying, the zonal value tells you the least the transfer taxes will be computed on.
- When planning to sell later, the same floor applies to you.
- For a family property passed down, the estate tax uses the higher of the two values at the date of death, which may be years before anyone settles it.
Our consultation for future home buyers looks at a lot before you commit to it, and the PD 1529 guide explains what to read on the title.
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