BIR Ruling [DA-543-99]

September 21, 1999 BIR RULING [DA-543-99] Mr. Jose B. Villongco 227 Gen. Luna St., Concepcion Malabon, Metro Manila S i r : This refers to your letter dated September 1, 1999 requesting for exemption from payment of the capital gains tax and documentary stamp tax in connection with the assignment of your real rights over a residential condominium (Unit 2019) and a parking lot (Slot 42) at Mega Plaza located at ADB Avenue corner Garnet St., Ortigas Center, Pasig City to your brother, Mr. Gerardo B. Villongco. 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 to which the right assigned pertain (BIR Ruling No. 174-90, September 10, 1990), while the title or ownership thereto still remains with the developer . However, any gain realized by the assignor/transferor from the disposition of the property, as determined in accordance with Section 40(A) and (B)(4) of the Tax Code of 1997, is subject to ordinary income tax which must be reported in the assignor's 1999 income tax return pursuant to Section 32(a)(3) of the same Code. The deed of assignment is, however, subject to the P15.00 documentary stamp tax on the notarial acknowledgment under Section 188 of the Tax Code of 1997 and not to the documentary stamp tax under Section 196 of the same Code considering that no actual transfer of title or ownership is involved in the transaction. This ruling is being issued on 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. Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)