Tax Base and the Amount of Taxes to be Paid on the Sale of Parking Space

January 4, 1994 BIR RULING NO. 002-94 50 (h) 000-00 002-94 Pili Realty Corporation LPL Mansions, 122 Alfaro St. Salcedo Village, Makati Metro Manila Attention: Ms . Amelita L . de Leon Vice-President and General Manager Gentlemen : This refers to your letter dated October 28, 1993 stating that you are the owner of a condominium building located at 107 H. V. dela Costa Street, Salcedo Village, Makati, Metro Manila; that it has sixty two (62) parking spaces at the 1st and 2nd basements of the building which has its own certificate of title distinct and separate from the condominium units; that the purchasers of the parking spaces would like this parking slots transferred to their respective names; and that the area of the parking spaces are twelve and one-half (12.5) square meters; and, that you are selling it at P7,000.00 per square meter or a total selling price of Eighty Seven Thousand Five Hundred (P87,500.00) Pesos. Based on the foregoing, you now request for the tax base and the amount of taxes to be paid on the sale of the said parking space. In reply, please be informed that in the absence of a zonal valuation, the computation of the tax consequence of the sale of your parking lot applying the provisions of Revenue Audit Memorandum Order No. 2-91 is as follows: Market value per latest tax declaration P13,956,920.00 4,229.43 sq. m. = P3,299.95 per sq. m. x 12.5 sq. m. = P41,249.37 Add: 150% 61,874.05 Tax Base P103,123.42 Tax Rate x 2.5% Tax Due P2,578.10 per sq. m. =============== The above computation is for the whole parking lot area of twelve and one-half (12.5) square meters. However, under Revenue Memorandum Order No. 7-90 clarifying certain pertinent provisions of Revenue Regulations No. 12-89 as amended by Revenue Regulations No. 1-90 implementing Section 50(b) of the Tax Code, as amended, the basis of the creditable withholding tax imposed under the said regulations shall be the gross selling price. For this purpose, the term "Gross Selling Price" means the consideration stated in the sales document or the fair market value/zonal value, whichever is higher. Accordingly, since your selling price is higher than the tax due following the provisions of RAMO No. 2-91, the tax base should be P7,000.00 per square meter or a total selling price of Eighty Seven Thousand Five Hundred Pesos (P87,500.00). Thus, the creditable withholding tax due from the sale of each of your aforesaid parking spaces, taking into consideration the fact that you are habitually engaged in the realty business, is computed as follows: Selling price P 7,000.00 per sq. m. x 12.5 sq. m. Total Selling Price per parking space P87,500.00 x 2.5% Tax Due per parking space P2,187.50 ========== Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue