BIR Ruling [DA-149-01]

September 3, 2001 BIR RULING [DA-149-01] Ms. Proserfina B. Misa Unit 16 G. 8 Wack Wack Rd. Mandaluyong, City M a d a m : This refers to your letter dated June 11, 2001 requesting for a ruling as to whether or not you are liable to pay capital gains tax on your transfer of rights of Parking Slot. Documents submitted show that you entered into a Contract to Sell with City Land, Inc. last June 18, 1999 together with your daughter, Phoemela M. Baranda; that you bought on installment Parking Slot No. PL55 from City Land Shaw Tower of Shaw Blvd. corner St. Francis, Mandaluyong City; that the purchase price of the parking slot, exclusive of interest, is P533,887.10; that you made a down payment of P106,777.40 and the monthly installment, inclusive of interest, is P11,247.55; and that you would now like to transfer your rights over the said property in favor of Spouses Rodolfo and Anita Parras. 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 current fair market value 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 assets, including pacto de retro sales and other forms of conditional sales, by individuals, including, estates and Trusts. The contemplated sale of rights over the parking slot in favor of the spouses Rodolfo and Anita Parras is not subject to the capital gains tax under Section 24(D)(1) of the Tax Code of 1997. The said Section necessarily requires that there be a conveyance of title to a real property and not merely rights over real property as you are presently transferring. However, the proceeds of your assignment of rights must be reported as part of gross income, and the net income therefrom shall be subject to the graduated income tax rates under Section 24 of the same Tax Code. Moreover, the Deed of Assignment of Rights to be executed for the purpose is not likewise subject to the documentary stamp tax prescribed under Section 196 of the Tax Code of 1997 considering that what is being conveyed or assigned is not the real property itself, but only the rights pertaining to such real property (BIR Ruling DA-309-2000 dated August 21, 2000) However, the acknowledgment thereof is subject to the P15.00 documentary stamp tax imposed under Section 188 of the Tax Code of 1997. 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 rendered null and void. Very truly yours, (SGD.) EDMUNDO P. GUEVARA Deputy Commissioner Legal and Inspection Group