BIR Ruling

November 2, 1972 Mr. Ramon Castillo 560 Burgos Street Kalibo, Aklan S i r : This refers to your letter dated April 14, 1972, stating among others, that you are the owner of a rented building wherein you derived a total rental of P6,120.00 in 1971; that you were required to pay a real estate dealer's fixed tax of P150.00 by the local revenue officer thereat; and that you have paid said tax under protest. cdt Under the foregoing circumstances you would like to be informed of the following: (1) As to what is a real estate dealer; (2) That as owner of a rented building, whether you are a real estate dealer; (3) As to whether or not the real estate dealer's tax demanded and collected against you by our revenue officer in the amount of P150.00 is legally justified; (4) As to whether or not you are entitled to a refund; and (5) Finally, as to how may you effect the refund of the tax you have paid. In reply, I have the honor to inform you that under Section 194(s) of the Tax Code, "real estate dealer includes any person engaged in the business of buying, selling, exchanging, leasing or renting property as principal and holding himself out as a full or part-time dealer in real estate or as an owner of rental property or properties rented or offered to rent for an aggregate amount of four thousand pesos or more a year. Any person shall be considered as engaged in business as a real estate dealer by the mere fact that he is the owner or subleasor of property rented or offered for rent for an aggregate amount of four thousand pesos or more a year. From the foregoing provision of law it is clear that as owner of a building wherein you derived an amount of P6,120.00 you are a real estate dealer. As such, you are subject to the initial annual fixed tax of P150.00 pursuant to Section 182(A)(2)(aa) of the Tax Code. Thereafter, the rate of tax shall be based on your actual rental income during the preceding calendar year as follows: (a) P150.00 if the annual income is over P4,000.00, but does not exceeds P10,000.00. (b) P300.00, if the annual income exceeds P10,000.00 but does not exceeds P30,000.00; (c) P500.00 if the annual income exceeds P30,000.00 but does not exceeds P50,000.00; (d) P1,000.00 if the annual income exceeds P50,000.00 As the tax collected from you is in accordance with law, you cannot claim for the refund thereof. aisadc Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue