Capital Gains Derived from Exchange of Real property subject to final schedular income tax

July 3, 1980 BIR RULING NO. 090-80 Mr. Jose L. Mallari 291 Epifanio de los Santos Avenue Mandaluyong, Metro Manila S i r : This refers to your letter dated April 28, 1980 requesting a ruling on whether the capital gains derived from an exchange or real property are subject to the capital gains tax. It appears that in a deed of exchange executed sometime in January, 1980, you transferred and swapped all your rights over a parcel of land covered by Transfer Certificate of Title No. 395056, situated at Doa Justa Village, Angono, Rizal, comprising of three hundred and sixty (360) square meters, and having a fair market value as per tax declaration of P23,400.00, for the rights of your brother-in-law, Edgardo R. Samson, over a parcel of land evidenced by Transfer Certificate of Title No. 492776, similarly located at Doa Justa Village, Angono, Rizal, containing an area of three hundred and forty (340) square meters, and valued as per tax declaration at P20,400.00. In reply, please be informed that under Section 34(h) of the Tax Code of 1977, as amended by Batas Pambansa Blg. 37, net capital gains from the sale or other disposition of real property by citizens of the Philippines or resident alien individuals shall be subject to the final schedular income tax at the rate of 10% on the first P100,000 or less or 20% on any amount over P100,000. The coverage of the law, therefore are not limited to sale transactions which involve transfer of real property for an amount of money or a money equivalent which is final and determinable. Rather, the law includes other disposition of real property, e.g. an exchange which involves transfer of property for property other than money or cash equivalent. cdt Very truly yours, RUBEN B. ANCHETA Acting Commissioner