BIR Ruling

October 15, 1973 Mr. David T. Angeles Buting, Pasig, Rizal S i r : This refers to your letter dated May 21, 1973 requesting information on the following queries relative to the exemption from capital gains tax by Presidential Decree Nos. 16 and 16-A, viz: "1. In a contract of sale of real estate payable by installments of, say, five years, are the installments made after October 5, 1973 including interests, also exempted from the capital gain tax? "2. If so, are the installments including interest required to be invested in government securities, etc.? "3. In the investment of the proceeds of sale all payable in toto, are the entire proceeds required to be so invested or the capital gain only? "4. Has there any amendment of Presidential Decree No. 16?" In reply thereto, I have the honor to inform you as follows: The gains corresponding to the installment payments received after October 5, 1973 remain exempt from the capital gains tax provided that the installment proceeds are invested within six (6) months from receipt thereof. The entire proceeds of the sale should be invested and not merely the gain realized from the transaction. Presidential Decree No. 16 dated October 5, 1973 was amended by Presidential Decree No. 16-A also dated October 5, 1973 which amendment provides that only the portion of the gains realized that corresponds to the portion of the proceeds of the sale, disposition or transfer of capital assets that is invested pursuant to the Decree, is exempt from the capital gains tax. cdtech Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue TAN-1601-593-5 "TAXPAYERS SHOULD INDICATE THEIR TAN IN ALL COMMUNICATIONS TO THE BIR."