BIR Ruling [DA-288-04]

May 24, 2004 BIR RULING [DA-288-04] 24 (D); 40 (A) DA-172-2002 Mr. Claro G. Gaac 23 Camella Street Cainta Green Park Village, Cainta, Rizal S i r : This refers to your letter dated August 13, 2003 requesting for exemption from the payment of capital gains tax and documentary stamp tax in connection with the assignment of your right over a condominium unit (Unit LG 10) at Cityland Pioneer Condominium located at 128 Pioneer Street, Mandaluyong City in favor of HB Communications, Inc. It is represented that you are in financial distress and you are no longer capable to continue paying the monthly amortization of the above-mentioned property; that you are constrained to assign your right to HB Communications who will eventually continue the payment of your obligation to the developer-seller which is the Cityland Development Corporation; and that you purchased the said condominium unit under installment in 1998 from the developer-seller and there are about twelve monthly amortization payments left in your contract. In reply, please be informed that assignment of rights in real property is not subject to the capital gains tax under Section 24(D)(1) of the Tax Code of 1997 because in assignment of rights, the assignee merely steps into the shoes of the assignor without acquiring a better right than what the assignor had in the property to which the right assigned pertains while the title or ownership thereof still remains with the developer. However, any gain realized by the assignor from and as a consequence of such assignment is subject to income tax. The Deed of Assignment, however, 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 from that represented, then this ruling shall be considered null and void. DaHISE Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group