BIR Ruling [DA-179-97]

April 16, 1997 BIR RULING [DA-179-97] Mr. and Mrs. Ramon Carredo 140 Ferrer St., Better Living Subd. Paraaque, Metro Manila S i r s : This refers to your letter dated December 10, 1996 requesting in effect for a ruling as to the correct computation of capital gains tax on a real property being sold to you by a certain Benjamin Guerrero. Documents submitted to this Office disclosed that the subject property as per Tax Declaration No. 003-0025 issued by the Municipal Assessor of Subic, Zambales (Revised in 1994 pursuant to Sec. 219 of R.A. No. 7160, otherwise known as the Local Government Code of 1991) is a residential land situated in Asinan Proper, Subic, Zambales; that it consists of Two Hundred Twelve Thousand Six Hundred Eighty Two (212,682) square meters with a market value of Seventeen Million Fourteen Thousand Five Hundred Sixty (P17,014,560.00) Pesos and assessed value of Three Million Four Hundred Two Thousand Nine Hundred Ten (P3,402,910.00) Pesos; and that pursuant to a Certification issued by the Asset Valuation Division dated September 12, 1996, there is no approved schedule of Zonal Values of Real Properties in Barangay Asinan, Subic, Zambales. In reply, please be informed that in view of the effectivity of the fair market values pursuant to Section 219 of R.A. No. 7160, otherwise known as "The Local Government Code of 1991" and the last paragraph of the Local Assessment Regulations No. 1-92 dated October 6, 1992, real properties (whether land or improvement) where the zonal values has not yet been determined, the basis of the internal revenue taxes on the said properties, viz, capital gains, creditable withholding, transfer and documentary stamps taxes shall be the fair market value which appears in the 1994 or later years Tax Declaration of the property involved. In such case, Revenue Audit Memorandum Order No. 2-91 dated February 18, 1991 increasing the fair market value of property per Tax Declaration by 100% or 150%, as the case may be, to cover adjustment in value shall not be applied. (BIR Ruling UN-089-95 dated March 7, 1995) Since there is no approved schedule of Zonal Values of Real Properties in Asinan Proper, Subic, Zambales as certified by this Office Asset Valuation Division, the correct tax base in the computation of the capital gains should be the Fair Market Value as indicated in the 1994 Tax Declaration of the Property, which in this case is P17,014,560.00. 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. aisadc Very truly yours, ALICIA L. TOMACRUZ Head Revenue Executive Assistant (Legal Service)