Sales of Real Property and BIR Clearance for the Registration of the Documents of Sales

January 14, 1987 BIR RULING NO. 010-87 50 (a) (4) 000-00 010-87 Gentlemen : This refers to your letter dated September 17, 1986 bearing on the internal revenue taxes in connection with your sales of real property and the BIR clearance for the registration of the documents of sales at the Register of Deeds of Makati, Metro Manila. In reply thereto, please be informed 1. that the BIR clearance prescribed in Section 1 of B.P. Blg. 37, otherwise known as the capital gains tax law on sale/disposition of real property (now Sec. 50(a)(4), NIRC, as amended by P.D. 1994, and as further amended by E.O. No. 37), pertinent portion of which are shown hereunder, is applicable only if the vendor of real property is an individual, estate or a trust. "No registration of any document transferring real property shall be effected by the Register of Deeds unless the Commissioner of Internal Revenue or his duly authorized representative has certified that such transfer has been reported and the tax herein imposed, if any, has been paid." This BIR clearance shall not apply if the vendor/transferor is a corporation or a partnership (See Rev. Memorandum Circular 41-86). 2. However, any sale or disposition for value of any real property is subject to documentary stamp tax, pursuant to Section 209 of the Tax Code. Under Section 2 of P.D. 1045, as implemented by Section 6 of Revenue Regulations No. 9-76, if the amount of the stamp tax due is P10.00 or more, the tax shall be paid to the BIR or thru its authorized agent bank, after which the following shall be made on the original and every copy of the deed of sale/transfer and duly certified to by the corresponding Revenue District Officer : (a) Amount of stamp tax paid; (b) Official Receipt number; (c) Date of payment, and (d) name and signature of the payor. If the vendor/transferor is an individual, estate or a trust in addition to the said certification for documentary stamp tax purposes, the BIR clearance referred to in paragraph 1 above is also required before a Register of Deeds may legally record the transaction and effect transfer of title over the real property sold/disposed. Likewise, the Register of Deeds shall not record the transaction, regardless of the vendor/transferor (whether corporate, a partnership, an individual, estate or a trust) and whether or not the real property sold is a capital or an ordinary asset in the hands of the said vendor/transferor, unless the evidence of payment of the documentary stamp tax on the deed of sale/disposition had been stated on all copies of the document and duly certified by the corresponding Revenue District Officer (See Revenue Memorandum Circular No. 44-86, dated December 4, 1986). Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner