Neill Property Residence Association, Inc.

October 22, 2018 BIR RULING NO. 1274-18 RA 7279; BIR Ruling No. 383-13 Neill Property Residence Association, Inc. Upper Banlat, Tandang Sora, Quezon City Attention: AAA _______________ Gentlemen : This refers to your letter dated June 27, 2017 requesting exemption from the payment of capital gains tax and other taxes, relative to the transfer of title of land from Neill Property Residence Association, Inc. (the "Association") in favor of BBB pursuant to Republic Act 7279 otherwise known as the "Urban Development and Housing Act of 1992." As represented, Neill Property Residence Association, Inc. is a community association under HIGC Registration No. 04-1865. It is the registered owner of the parcel of land, covered by Transfer Certificate of Title (TCT) No. N-181868 issued by the Registry of Deeds for Quezon City, located at Upper Banlat, Brgy. Tandang Sora, Quezon City. The aforesaid lot was acquired through a loan under the Community Mortgage Program (CMP) of the Social Housing Finance Corporation (SHFC) with LGU of Quezon City as Originator. The said project was taken-out/paid on January 16, 1992 in the amount of PhP1,957,336.80, BBB is one of the beneficiaries therein and is now in the process of transferring the subject properties to his name. In reply, please be informed that the transfer of a parcel of land to the beneficiary is not subject to either the capital gains tax imposed under Section 27 (D) (5) of the Tax Code of 1997, as amended, or the creditable withholding tax imposed under Revenue Regulations (RR) No. 2-98, as amended, implementing Section 57 (B) of the same Code, considering that the said transfer is merely a formality to finally effect the transfer of the said property to the member-beneficiary of your Association who actually bought the same from the former owner through your Association. In other words, the Association is in fact transferring the ownership of the property to its member-beneficiary who actually owns the same. Furthermore, the said transfer is not subject to the donor's tax imposed under Section 99 of the Tax Code of 1997, as amended, since there is no donative intent or intention on the part of the Association to donate the said property to said member-beneficiary, considering that it could not donate property the ownership of which belongs to the donee (member-beneficiary) himself. (BIR Ruling No. 383-13 dated October 22, 2013) CAIHTE It is noted that under Section 196 of the Tax Code of 1997, as amended, the deeds or documents subject to the documentary stamp tax imposed therein are those where the realty sold shall be granted, assigned, transferred, or otherwise conveyed to a purchaser or purchasers or to any other person or persons designated by such purchaser or purchasers, thereby excluding from its purview the instant case considering that the supposed purchaser is actually the owner thereof. Accordingly, the transfer of title of the above-described property to BBB is not subject to the documentary stamp tax imposed under Section 196 of the Tax Code of 1997, as amended. However, the notarial acknowledgment to said deed of conveyance is subject to the documentary stamp tax of P15.00 pursuant to Section 188 of the Tax Code of 1997. (BIR Ruling No. 383-13 dated October 22, 2013) It is, however, understood that the Certificate Authorizing Registration (CAR) shall only be issued after the submission of the requirements provided under Revenue Memorandum Order (RMO) 15-2003 and after it is established upon proper verification by the Revenue District Officer (RDO) concerned that, considering the rules on valuation of real property, the actual selling price per sale transaction of the house and lot packages in this case does not really exceed P450,000.00 and P180,000.00 for lot only. Thus, sale of a house and lot or lot only above the maximum amount shall be subject to the corresponding internal revenue taxes. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue