BIR Ruling [DA-115-02]

July 04, 2002 BIR RULING [DA-115-02] 24 (D) (1); 196; 188 DA-194-2000 Mr. Manuel C. Suarez Lot 3 Block 7, Soliven Street Greenheights Subdivision Phase 1, Concepcion, Marikina City S i r : This refers to your letter dated June 11, 2002, requesting for exemption from capital gains tax and documentary stamp tax on the swapping of real properties between you and Clyde C. Juloya. You have represented that you are the owner of a parcel of land, containing an area of two hundred forty (240) square meters, more or less, covered by Transfer Certificate of Title No. 212419, located at Lot 3 Block 7, Soliven Street, Greenheights Subdivision, Phase 1, Concepcion, Marikina City; that relying on the information given by the developer as to the exact location of their property and in good faith and due to honest mistake, you constructed a house on the lot owned by Clyde C. Juloya, covered by Transfer Certificate of Title No. 23192; that the said lots are adjacent (same block, same street, same barangay, identical areas, shapes and values) to each other; that it was only after the house was constructed that you found out that the lot was not yours; and that after a series of conferences and negotiations, an agreement between you and Mr. Juloya was reached whereby the two of you agreed to swap and exchange the properties without any consideration, through the execution of a Deed of Exchange. In reply, please be informed that since the exchange transaction is without any monetary consideration, and considering further that the execution of the Deed of Exchange is merely to correct the mistake resulting from the erroneous construction of a house on the lot owned by Clyde C. Juloya, the same is not subject to the capital gains tax, imposed under Section 24(D)(1) of the Tax Code of 1997, nor to the withholding tax imposed under Revenue Regulations No. 2-98. Furthermore, the said exchange of real properties is not likewise subject to the documentary stamp tax imposed under Section 196 of the Tax Code of 1997. However, the notarial acknowledgment to the said deed is subject to the documentary stamp tax of P15.00 only pursuant to Section 188 of the Tax Code of 1997. ( BIR Ruling No. DA 068-98 dated March 2, 1998 ) This ruling is issued on the basis of the foregoing representations. 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, Commissioner of Internal Revenue By: (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service