Correct Basis of Computing the EWT, DST and Other Transfer Taxes Relative to the Sale of Townhouse Units

May 28, 1998 BIR RULING NO. 082-98 082-98 Yin Enterprises & Development Corporation 955 Quezon Blvd., Ext. Quezon City Attention: Mr . Kent T . Garcia President Gentlemen : This refers to your letter dated June 23, 1997 requesting, in effect, for a ruling on the correct basis of computing the expanded withholding tax, documentary stamp tax and other transfer taxes relative to the sale of townhouse units covered by Transfer Certificates of Title. LLphil It appears that on January 2, 1997, a deed of sale was executed for one of your townhouse units covered by a Transfer Certificate of Title (TCT) registered by the Land Registration Authority of Quezon City; that the same was processed by Examiners of RDO NO. 38, North Quezon City, the computation was as follows: Lot 145.10 sq. m. X P7,500 P1,088,250.00 Improvements P1,525,610.00 X P100% 1,525,610.00 Zonal Valuation P2,613,860.00 that on June 9, 1997, a similar townhouse unit was also processed by a different set of Examiners, also of the same district, but the computation was as follows: Lot 156.25 sq. m. X P7,500 P1,088,250.00 Improvements 318,01 sq. m. X P7,500 2,385,075.00 Zonal Valuation P3,556,950.00 and that your company would like to know why in the determination of the zonal value for the sale made on June 9, 1997, the value of the improvement is given similar or the same value as the lot since the property is covered by a TCT and not by a CCT. In reply thereto, please be informed that paragraph 5 of Department Order No. 66-96 dated April 30, 1996, relative to the "Implementation of the Revised Zonal Values of Real Properties in Quezon City under Revenue District No. 38 (North Quezon City) Revenue Region No. 7 (Quezon City) for Internal Revenue Tax Purposes" provides, viz.: "xxx xxx xxx "5. Values of Condominium and Townhouses : In determining or arriving at the zonal values for condominiums and townhouses, the value of the land as well as the value of the building shall be treated as one, if the title is a CCT or Condominium Certificate of Title. However, if the title is a TCT or Transfer Certificate of Title, land and improvements shall be given separate values. The ground floor of a condominium shall be classified as commercial and 20% of the established value shall be added thereto." Such being the case, if as represented by you, your townhouse unit which was sold on June 9, 1997 is covered by a Transfer Certificate of Title, then the land and the improvement should be given separate values for purposes of computing the expanded withholding tax as well as the documentary stamp tax. Very truly yours, (SGD.) LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue