BIR Ruling [DA-073-05]

March 4, 2005 BIR RULING [DA-073-05] 24 (D), 196; DA 349-2003 dtd 10/09/03 Mr. Edgardo G. Bendigosa & Mrs. Fe Rossini B. Coral #33 J.P. Rizal St., San Juan Metro Manila Sir/Madam : This refers to your request for a certificate of tax exemption on your Deed of Partition and Adjudication of your properties as co-owners since you now intend to assign each one his/her own. It is represented that you are brother and sister being the children of Sps. Pedro & Pacifica G. Bendigosa; that two (2) parcels of land were placed under your names as co-owners; that however, mature enough as you are and having families of your own, you would like to discontinue and terminate your co-ownership so that the title to individual properties can be adjudicated in your own names; that attached are the following documents: 1) TCT #10077-R & TCT #40521 both of the Registry of Deeds for the Municipality of San Juan; 2) Tax Declaration Nos. 96-37986 & 96-151-48 of the Municipal Assessor-San Juan; 3) Deed of Partition & Adjudication. In reply, please be informed that under Section 24(D)(1) of the Tax Code of 1997, a final tax of six percent (6%) based on the gross selling price or the current fair market value as determined in accordance with Section 6(E) of the Tax Code of 1997, whichever is higher, is imposed upon capital gains presumed to have been realized from the sale, exchange, or other disposition of real property located in the Philippines classified as capital asset including pacto de retro sales and other forms of conditional sales by individuals, including estates and trust. Considering that there is no sale, exchange or disposition of property in the above-mentioned transaction but merely a partition without any consideration of the properties among the co-owners which properties rightfully belong to them, the same is not subject to income tax and consequently to the capital gains tax imposed under Section 24(D) of the Tax Code of 1977. DTaAHS Moreover, the partition of the said properties between the co-owners is not subject to documentary stamp tax imposed under Section 196 of the Tax Code of 1997, but only to the documentary stamp tax of P15.00 prescribed under Section 1888 of the same Tax Code. (BIR Ruling No. DA-328-2000 dated August 28, 2000; BIR Ruling DA-127-2002 dated July 25, 2002) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group