Taxes Due and Imposable on the Sale of a Parcel of Land

May 22, 1990 BIR RULING NO. 089-90 21 (e) 196 014-90 089-90 S i r : This refers to your letter dated April 6, 1990 in effect requesting a ruling relative to the taxes due and imposable on the sale of a parcel of land by you. aisadc You represented that you are the owner of a parcel of land with an area of P12,000 sq. meters; that a cooperative has offered to buy the land at the price of P800.00 per square meter; that the purchase is to be financed by the National Home Mortgage Finance Corporation; that while you are engaged in the business of renting out apartments, you are not a real estate broker, neither are you engaged in the business of buying and selling real estate; that the Assistant Revenue District Officer of Paraaque, Metro Manila has informed the President of the cooperative association that the total amount of taxes to be paid is P576,000.00 (P480,000.00 as capital gains tax and P96,000.00 as documentary stamp tax.) In reply, please be informed that based on the foregoing facts, said parcel of land is a capital asset pursuant to Section 33(1) of the Tax Code, as amended; hence, the sale thereof is subject to the capital gains tax at the rate of 5% of the gross selling price or the fair market value prevailing at the time of sale, whichever is higher, pursuant to Section 21(e) of the Tax Code, as amended. Moreover, you will be liable to pay the documentary stamp tax on the deed of sale and conveyance of real property at the rate of ten pesos (P10.00) for each one thousand pesos, or fractional part thereof pursuant to Section 196 of the Tax Code. Finally, since the above described property is a capital asset own by you as an individual, it is not covered by creditable withholding tax on sales, exchange or transfer of real property prescribed by Revenue Regulations No. 1-90 in relation to Revenue Regulations No. 6-8. Very truly yours, (SGD.) JOSE U. ONG Commissioner