Properties Converted into Subdivision Lots - Tax Consequences

March 10, 1993 BIR RULING NO. 088-93 PROPERTIES CONVERTED INTO SUBDIVISION LOTS TAX CONSEQUENCES 196 000-00 088-93 B.E. San Diego, Inc. 462 C. Palanca Sr. Quiapo, Manila Attention: Ms . Flora A . San Diego-Sison General Manager This refers to your letter dated August 20, 1990 stating that your real properties located at Pasay City, Malabon, Valenzuela, and Bangcal, Meycauayan, Bulacan were subdivided and developed into subdivision projects: that the lots were sold on installment basis to lot buyers sometime in 1974 and 1975 on a 10 year term basis; that the selling prices of the lots as stated in the Contract to Sell executed in 1974 and 1975 were very low and the same were the amounts paid to you; and, it is only now that the lot buyers who have paid their lots for sometime, are effecting the transfer of the title of the lots in their names. cdta In connection therewith, you now request a ruling to the effect that the basis for computing the documentary stamp tax for the aforementioned transaction is the consideration appearing in the Contract to Sell and not the zonal value of the property at this time when the transfer of the title to the property in favor of the buyer is affected. In reply thereto, I have the honor to inform you that since the Contract to Sell in the aforementioned transactions were executed in 1974 and in 1975 and the consideration stated therein must have been the amount paid, the tax base for documentary stamp tax purposes is the consideration appearing in the said Contract to Sell pursuant to Section 196 of the Tax Code, as amended. This ruling is based on the facts presented so that if later on, it will be found that these are not true and correct, this ruling shall be considered null and void. JOSE U. ONG Commissioner of Internal Revenue