Capital Gains Tax on Properties Being Exchanged

July 13, 1987 BIR RULING NO. 201-87 21 (e) 88-87 201-87 Gentlemen : This refers to your letter dated December 10, 1986, requesting a ruling to the effect that only the difference in the market value of the properties being exchanged is subject to the capital gains tax pursuant to Section 21(e) of the Tax Code, as amended by Executive Order No. 37. It is represented that your client, Mr. Hector G. Hofilena, Jr. exchanged his property situated in Paraaque, Metro Manila, together with all the existing improvements thereon, his title thereto being evidenced by Transfer Certificate of Title No. 102700 issued by the Registry of Deeds for Pasay City with a market value of P120,000 with that of the property, also of your client, spouses Juan Escobar and Carmen Apacible Escobar situated in Quezon City, together with all existing improvements thereon, their title thereto being evidenced by Transfer Certificate of Title No. 153773 issued by the Registry of Deeds for Quezon City with a market value of P129,270.00. Based on the foregoing facts, your client, Mr. Hector G. Hofilea, Jr. is subject to the capital gains tax at the rate of 5% based on the fair market value of his property while your other clients, spouses Juan Escobar and Carmen Apacible Escobar are likewise subject to the capital gains tax based on the fair market value of their property, pursuant to Section 21(e) of the Tax Code, as amended by Executive Order No. 37. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner