Arcely R. Montero

February 8, 2017 BIR RULING NO. 043-17 RA 7279; BIR Ruling No. 383-13 AAA ____________________ ____________________ Madam : This refers to your letter dated December 7, 2015 requesting exemption from the payment of Capital Gains Tax and other taxes, relative to the transfer of title of land from Kapisanan ng Sambahayang Magkakapitbahay ng Brgy. Culiat Homeowners' Association, Inc. pursuant to Republic Act 7279 otherwise known as the "Urban Development and Housing Act of 1992." cHDAIS It is represented that Kapisanan ng Sambahayang Magkakapitbahay ng Brgy. Culiat Homeowners' Association, Inc. (TIN 000-000-000-000) is the registered owner of the parcel of land identified as Lot 680-B-27 of the subdivision plan (LRA) Psd-39594 approved as a non-subdivision project, being a portion of Lot 680-B, Psd-20799 L.R.C. Record No. 5975 containing an area of thirty square meters (30 sq.m.) covered by Transfer Certificate of Title (TCT) No. 004-2011000277 issued by the Registry of Deeds for the Quezon City; that it is a non-stock, non-profit organization duly registered with the Housing and Land Use Regulatory Board (HLURB);that the aforesaid lot were acquired through a loan under the Community Mortgage Program (CMP) of the Social Housing Finance Corporation (SHFC);that BIR Certificate Authorizing Registration Serial No. 200800050265 issued on October 22, 2008 by Revenue District Office No. 28-Novaliches by paying documentary stamp tax of __________; that on September 24, 2013, the SHFC issued a Partial Release of the Real Estate Mortgage which is annotated in TCT No. 004-2011000277; and that AAA is now in the process of transferring the portion of her purchased subject property to her name by virtue of a Deed of Assignment dated September 9, 2015. In support of your request, you have completely submitted on March 8, 2016 the following documents: 1) Written Application for Exemption filed with the Law Division; 2) Deed of Assignment; 3) Certified True Copy of the TCT and Tax Declaration; 4) Certification from the SHFC that the property was acquired through CMP; 5) Certified True Copy of the Articles of Incorporation of the Community Association; 6) Certified True Copy of the Masterlist of Qualified Beneficiaries duly certified by the SHFC; EATCcI 7) Certificate of Payment; 8) SHFC Partial Release of Real Estate Mortgage; 9) BIR Certificate of Registration; and 10) Other pertinent documents . In reply, please be informed that the transfer of a parcel of land to AAA covered by TCT No. 004-2011000277 is not subject to either the capital gains tax imposed under Section 27 (D) (5) of the Tax Code of 1997, as amended, or the creditable withholding tax imposed under Revenue Regulations No. 2-98, as amended, implementing Section 57 (B) of the same Code, considering that the said transfer is merely a formality to finally effect the transfer of the said properties to the member-beneficiaries of your Association who actually bought the same from the former owner through your Association. In other words, the association is in fact transferring the ownership of the property to its member-beneficiaries who actually own the same. Furthermore, the said transfer is not subject to the donor's tax imposed under Section 99 of the Tax Code of 1997, since there is no donative intent or intention on the part of the Association to donate the said property to said member-beneficiary, considering that it could not donate property the ownership of which belongs to the donee (member-beneficiary) himself. (BIR Ruling No. 383-13 dated October 22, 2013) It is noted that under Section 196 of the Tax Code of 1997, the deeds or documents subject to the documentary stamp tax imposed therein are those where the realty sold shall be granted, assigned, transferred, or otherwise conveyed to a purchaser or purchasers or to any other person or persons designated by such purchaser or purchasers, thereby excluding from its purview the instant case considering that the supposed purchaser is actually the owner thereof. Accordingly, the transfer of title of the said property to AAA is not subject to the documentary stamp tax imposed under Section 196 of the Tax Code of 1997. However, the notarial acknowledgment to said deed of conveyance is subject to the documentary stamp tax of P15.00 pursuant to Section 188 of the Tax Code of 1997. (BIR Ruling No. 383-13 dated October 22, 2013) It is, however, understood that the Certificate Authorizing Registration (CAR) shall only be issued after the submission of the requirements provided under RMO 15-2003 and after it is established upon proper verification by the Revenue District Officer (RDO) concerned that, considering the rules on valuation of real property, the actual selling price per sale transaction of the house and lot packages in this case does not really exceed P450,000.00 and P180,000.00 for lot only. Thus, sale of a house and lot or lot only above the maximum amount shall be subject to the corresponding internal revenue taxes. ISHCcT This ruling is being issued on the basis of 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, (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue