BIR Ruling [DA-625-99]

November 4, 1999 BIR RULING [DA-625-99] Conrad & Sons Realty, Inc. 122 Alfaro Street, 2nd Floor, LPL Mansions Salcedo Village, Makati City Attention: Ms . Ma . Thelma A. Palma Accounting Manager Gentlemen : This refers to your letter dated March 29,1999 requesting for a ruling as to the basis of the computation of tax if the title of the parking spaces will be transferred to the name of the buyer. llcd It is represented that Conrad & Sons Realty, Inc. is the developer of a condominium building called LPL Greenhills condominium located at No. 17 Eisenhower Street, Greenhills, San Juan, Metro Manila; that you are also a member of the Chamber of Real Estate and Builders Association (CREBA) being a long time real estate developer and broker; that the parking spaces have their own titles distinct and separate from the condominium units; and that the parking spaces are sold at a much lower price than a condominium unit. In reply, please be informed that under Revenue Regulations No. 2-98, as amended by Revenue Regulations No. 8-98, implementing Section 57(B) of the Tax Code of 1997, the basis of the creditable withholding tax on the sale, transfer or exchange of real property classified as ordinary asset shall be the gross selling price or the fair market value determined in accordance with Sec. 6(E) of the Tax Code, whichever is higher. Thus, the creditable withholding tax due from the sale of each of your aforesaid parking space, taking into consideration the fact that you are habitually engaged in the realty business is in accordance with the withholding tax rates provided for under Sec. 2.57.2(J) of the aforestated Regulations and computed as follows: Selling price per sq. m. . . . Multiplied by the area . . . Total selling price per parking space Compared with zonal value whichever is higher . . . Multiplied by the tax rate . . . Tax due per parking space . . . ==== This ruling is being issued on the basis of the foregoing facts as represented. However, if it will be disclosed upon investigation that the facts are different, then this ruling shall be considered as null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group