BIR Ruling [DA-118-00]

February 23, 2000 BIR RULING [DA-118-00] Ms . Betty Dela Cruz and Mr . Jose Torres 401 Villa Liwayway Subdivision Maysan, Valenzuela, Metro Manila Gentlemen : This refers to your undated letter stating both of you are single and are co-owners of four (4) parcels of land without any improvements, all located in Maysan, Valenzuela, Metro Manila, as follows: "1. A Residential lot is located at Villa Liwayway Subd. Valenzuela, Metro Manila covered under TCT No. V-40575, Tax Dec. No. C-019-03390, containing an area of 288 sq. meter. "2. A Residential lot is located at Villa Liwayway Subd. Valenzuela, Metro Manila covered under TCT No. V-27034, Tax Dec. No. B-019-04261, containing an area of 267 sq. meter. prcd "3. A Residential lot is located at Villa Liwayway Subd. Valenzuela, Metro Manila covered under TCT No. V-27033, Tax Dec. No. B-019-04260, containing an area of 289 sq. meter. "4. A Residential lot is located at Villa Liwayway Subd. Valenzuela, Metro Manila covered under TCT No. V-18777, Tax Dec. No. B-019-03947, containing an area of 615 sq. meters." that in order to forestall any problem in the future, you have agreed to divide the aforementioned properties among the two of you and transfer the title of said properties to your respective names; and that lot nos. 1, 2 and 3 will go to Jose Torres and lot no. 4 will got to Betty Dela Cruz. Based on the foregoing, you now in effect request for a ruling that the aforementioned division of properties be exempt from capital gains and documentary stamp taxes. In reply, please be informed that since as aforestated, the division of properties is a mode of dividing/transferring the ownership of the subject properties in your respective names, it goes without saying that the intended division of properties between the two of you will be executed without consideration. Suffice it to say that since it is not in connection with a sale, no income was generated and a fortiori , no capital gains tax nor creditable withholding tax is payable and collectible. Moreover, Section 185 of the Revised Documentary Stamp Regulations (Regulations No. 26) provides that conveyances of realty not in connection with a sale , to trustees or other persons without consideration are not taxable. In view thereof, this office is of the opinion as it hereby holds that the intended division of properties between the two of you is not subject to the capital gains tax imposed under Section 24(D)(1) of the Tax Code of 1997 nor to the creditable withholding tax prescribed by Revenue Regulations No. 2-98, implementing Section 57(B) of the Tax Code of 1997. Neither is it subject to the documentary stamp tax imposed under Section 196 of the Tax Code of 1997. However, the notarial acknowledgment to said document is subject to the documentary stamp tax of P15.00 only pursuant to Section 188 of the same Code. cdlex This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation it shall 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.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group