Ms. Anna Maria J. Ferreria-Guevara

May 16, 2008 BIR RULING [DA-293-08] Sec. 24 (D) (2); DA-095-06 Ms. Anna Maria J. Ferreria-Guevara 803-A, 8th Floor Renaissance 3000, Renaissance Center, Meralco Avenue, Ortigas Center, Pasig City M a d a m : This refers to your letter dated February 28, 2008 requesting exemption from the payment of capital gains tax on the sale of your principal residence pursuant to Section 24 (D) (2) of the Tax Code of 1997, as amended. It is represented that your principal residence covered by TCT Nos. 105898 and 169524 consists of Lots 322 and 324 with improvements is situated at No. 324 Aquamarine Street, Posadas Village, Muntinlupa City; that your office is located at Quezon City which is your registered address with the BIR; that your principal residence was sold on September 15, 2003 for Three Million Five Hundred Thousand Pesos (P3,500,000.00) to Sucat Realty Holdings, Inc.; that on September 25, 2003, you purchased a condominium unit from Romago, Inc. for Eleven Million Two Hundred Twenty Three Thousand Four Hundred Fifty Pesos (P11,223,450.00); that the proceeds of the sale of your principal residence was fully utilized in the purchase of your new condominium residence; that on October 1, 2003, you executed a Sworn Declaration of Intent to comply with the requirements of Sec. 24 (D) (2) of the Tax Code of 1997; that on October 7, 2003, the documentary stamp tax return was filed with BIR RDO No. 53 and paid at Equitable PCIBank Alabang Manuela; that on October 10, 2003, the capital gains tax return was filed at BIR RDO No. 53 with a notation "Exempt per Letter of Intent"; that the documentary stamp tax on the sale of your residence was paid twice due because the buyer of your residence also filed and paid the documentary stamp tax due on November 17, 2003; that your previous request for exemption from payment of Capital Gains Tax with the Revenue District Office of the Bureau of Internal Revenue (BIR) was denied for the following reasons: (1) that the title to the residence you purchased is not yet in your name, and (2) that the property you sold was not your principal residence because your registered address with the BIR is at Quezon City; that despite your full payment of the purchase price of the condominium, the Condominium Certificate of Title (CCT) was not issued accordingly due to the delay in the developer's payment of taxes; that on April 20, 2004, you notified the BIR, City Assessor's Office, Metropolis Alabang of the delay in the issuance of your CCT; that CCT No. PT-48799 in your name was only issued on February 2007; and that in support of your request you submitted the following documents: IADCES a) Deed of Absolute Sale dated September 15, 2003 between Anna Maria F. Guevara and Sucat Realty Holdings, Inc.; b) Deed of Absolute Sale dated September 25, 2003 between Romago, Inc. and Anna Maria F. Guevara; c) Sworn Declaration of Intent dated October 1, 2003; d) Barangay Clearance from Barangay Sucat, Muntinlupa City dated October 1, 2003 certifying that Anna Ma. F. Guevara is a bonafide resident of No. 322 Aquamarine St., Posadas Village, Sucat, Muntinlupa City; e) Documentary Stamp Tax Return dated October 7, 2003; f) Capital Gains Tax Return dated October 10, 2003; g) Letter addressed to BIR, City Assessor's Office, Metropolis Alabang, dated April 20, 2004; and h) Condominium Certificate of Title No. PT-48799 in the name of Anna Maria J. Ferreria. In reply, please be informed that pursuant to Section 24 (D) (2) of the Tax Code of 1997, as amended, capital gains presumed to have been realized from the sale or disposition of principal residence by natural persons, the proceeds of which is fully utilized in acquiring or constructing a new principal residence within eighteen (18) calendar months from the date of sale or disposition, shall be exempt from the capital gains tax imposed under Section 24 (D) (1) of the same Code, provided, that the historical cost or adjusted cost basis of the real property sold or disposed shall be carried over to the new principal residence built or acquired, and that the Commissioner shall have been duly notified by the taxpayer within thirty (30) days from the date of sale or disposition through a prescribed return of your intention to avail of the tax exemption thus mentioned, and which can only be availed of once every ten (10) years. cSDIHT The same Section further provides that if there is no full utilization of the proceeds of sale or disposition, the portion of the gain presumed to have been realized from the sale or disposition shall be subject to capital gains tax. For this purpose, the gross selling price or fair market value at the time of sale, whichever is higher, shall be multiplied by a fraction which the unutilized amount bears to the selling price in order to determine the taxable portion for the purpose of computing the tax prescribed under Section 24 (D) (1) of the same Tax Code. Inasmuch as you have sold your principal residence and purchased a new one in less than 30 days, have fully utilized the proceeds of the sale or disposition of your property in the acquisition of your new principal residence condominium unit (Renaissance 3000 Condominium), as required by law and have notified the Commissioner of the same within thirty (30) days from the sale or disposition of your property, the proceeds from the sale of your property in favor of Sucat Realty Holdings, Inc., is exempt from the 6% capital gains tax imposed under Section 24 (D) (1) of the Tax Code of 1997, as amended, but subject to the documentary stamp tax imposed under Section 196 of the same Code. (BIR Ruling No. DA-334-98 dated July 21, 1998; DA-088-2002 dated May 7, 2002). This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be ascertained that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service