BIR Ruling

November 5, 1969 Mr. Macario N. Bermejo Rm. 200-A, Municipal Board City Hall, Manila S i r : This refers to your letter dated September 29, 1969 requesting information as to whether or not capital gains tax is assessable in cases of real property acquired previously thru inheritance. In reply, I have the honor to inform you in the affirmative, assuming that the real property sold is a capital asset. Section 34(a) of the Tax Code provides that real property is a capital asset if it is not used in a trade or business of the taxpayer. In computing net capital gain, the following percentages of the gain recognized upon the sale thereof shall be taken into account: (1) One hundred per centum if the capital asset has been held for more than twelve months; (2) Fifty per centum if the capital asset has been held for more than twelve months. (Sec. 34 (b) Tax Code) Capital asset acquired thru inheritance, is considered held by the taxpayer from the moment of death of the decedent up to the time of sale. Consequently, in computing the gain derived from the sale of real property acquired thru inheritance, such gain shall be based on the fair market price or value thereof at the time of death of the decedent. In this regard, the value of the property as appraised for the purpose of the inheritance tax shall be deemed to be its fair market value. (Sec. 139, Income Tax Regulations). prcd Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue