Capital Gains Tax Imposed on the Transfer of Title

February 8, 1990 BIR RULING NO. 014-90 21 (e) 202-88 014-90 Gentlemen : This refers to your letter dated October 4, 1989 stating that in 1986 your client, the Metropolitan Bible Baptist Church of Sta. Ana Inc. bought a parcel of land located in the City of Manila from Rodolfo Yuson; that the said land is devoted solely for religious purposes by your client; that your client wants to effect the transfer of the title to the said lot in its own name but the Register of Deeds requires the payment of the capital gains tax; and that Rodolfo Yuson could no longer be contacted. Based on the foregoing, you request a ruling as to whether the above transaction is exempt from the payment of the capital gains tax. cd In reply, please be informed that under Section 21(e) of the Tax Code, as amended by Executive Order No. 37, the above transaction is subject to the capital gains tax. The seller, Rodolfo Yuson and not your client, is the party liable for the payment of the capital gains tax which consists of 5% based on the selling price or market value thereof, whichever is higher. BIR clearance is required before the title to said property can be transferred to your client, pursuant to Section 49(a) (4) of the Tax Code, as amended by Executive Order No. 37 which states as follows: "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." (BIR Ruling No. 010-87 dated January 4, 1987) Moreover, the Deed of Sale is subject to documentary stamp tax based on the consideration or value received or paid for the land as stated on said Deed pursuant to then Section 209 of the Tax Code, as amended. cdt Very truly yours, (SGD.) JOSE U. ONG Commissioner