Deed of Conveyance Transferring a Lot on which the Condominium Building was Constructed is Not Subject to Documentary Stamp Tax

April 2, 1991 BIR RULING NO. 052-91 196-00 125-89 052-91 Gentlemen : This refers to your letters dated December 22, 1990 and February 12, 1991 stating that you are engaged in the development of Townhouses and Condominium Projects; that on your lot covered by TCT No. 127126 located at San Roque District, Pasay City, containing an area of 2049 square meters, you constructed a building with 41 condominium units; that all the 41 units have already been sold to different buyers who were issued Condominium Certificates of Titles (CCT) pursuant to the Condominium Law (R.A. 4726); that on each sale of the condominium units, you have paid the corresponding documentary stamp tax, withholding tax, transfer tax and registration fees based on the prevailing market price of the unit, that as required by the Condominium Act, each title to a unit sold is annotated on the certificate of title of the land; that, as required by said law, the developers lose ownership in the land and must transfer the title of the land to the condominium association as common property; that this is usually done by a Deed of Conveyance without any monetary consideration because the value of the land which is a condominium common property is already included in the purchase price of each individually titled condominium unit. Based on the foregoing, you now request confirmation that the Deed of Conveyance executed by you transferring the lot on which the condominium building was constructed is not subject to documentary stamp tax under Section 196 (formerly 245) of the Tax Code, as amended. In reply, please be informed that "conveyance of realty not in connection with a sale, to trustees or other person without consideration are not taxable." (Sec. 185, Regulation No. 26 of the Revised Documentary Stamp Tax Regulations) In the instant case, the Deed of Conveyance in question is without consideration and the conveyance is not in connection with a sale made to the condominium corporations. In fact, the sale by you of the condominium units were made in favor of the individual unit owners of the condominium project; and the purpose of the conveyance to the condominium corporation is for the Management of the project for the common benefit of the unit owners. (Section 10 R.A. No. 4726, Condominium Act) Accordingly, the aforesaid Deed of Conveyance is not subject to the documentary stamp tax imposed by Section 196 of the Tax Code, as amended. However, the acknowledgment is subject to the documentary stamp tax on Certification in the amount of P3.00 pursuant to Section 188 of the Tax Code as amended. aisadc Very truly yours, (SGD.) JOSE U. ONG Commissioner