Computation of the Zonal Valuation of Real Property

September 24, 1990 BIR RULING NO. 187-90 21 (e) 187-82 187-90 M a d a m : This refers to your letter dated September 4, 1990 stating that you were registering last August 21, 1990 a deed of sale of a piece of land situated at Cotabato City denominated as a commercial lot having an area of 438 sq. meters with a total fair market value of P166,634.00 at P340.00 per sq. m. as appraised by the City Assessor's Office, together with a retazo lot in front of it having an area of 26 sq. meters with an appraisal value of P8,840 at P340.00 per sq. meter; that the total selling price appearing in the deed of sale is P175,474.00; and that the BIR Examiner at the Regional Office computed the capital gains tax by adding 50% of the fair market value as appearing in the tax declaration of the City Assessor's Office, thus: P166,634.00 x 150% = P249,951.00 8,840.00 x 150% = 13,260.00 Total P263,211.00 Capital gains x 05% Capital gains tax payable P13,161.00 =========== Based on the foregoing representations, you now request in effect a ruling as to whether or not the above computation is correct. In reply, please be informed that the computation made by the BIR Examiner at the Regional Office, Cotabato City is correct considering that the zonal valuation of real property for internal revenue tax purposes has not yet been established in Cotabato City. Under Revenue Audit Memorandum Order No. 3-87 pending final determination of zonal values and as a short-run measure to establish a more realistic basis for real property valuation, the following internal revenue taxes shall be assessed either on the basis of the selling price of the real property as shown in the deed of sale to the fair market value thereof whichever is higher. The transitory valuation rules shall be as follows: a) . . . b) . . . c) If the real property is classified in the tax declaration as a commercial or industrial property, the same shall be increased by fifty percent (50%), regardless of regional locations; cdtech d) . . . Very truly yours, (SGD.) JOSE U. ONG Commissioner