BIR Ruling No. 207-13

June 14, 2013 BIR RULING NO. 207-13 RA No. 7279; BIR Ruling No. 130-10; BIR Ruling No. 040-10 Samahang Nagkakaisa ng Labuin Homeowners Association, Inc. Brgy. Labuin, Sta. Cruz, Laguna Attention: Leandro P. De Leon Tagapangulo/Pangulo Gentlemen : This refers to your letter dated April 4, 2011 requesting for a tax exemption on the sale of real property pursuant to Republic Act 7279 otherwise known as the "Urban Development and Housing Act of 1992". It appears that Josefina Becina Lo married to Agustin Lo is the registered owner of parcels of land covered by two (2) Transfer Certificates of Title, to wit: cCA aHD TCT No. Area (sq. m.) Tax Declaration No. T-154577 2,633 25-0013-00253 T-154574 2,568 25-0013-00250 issued by the Registry of Deeds for Province of Laguna. The aforesaid properties are situated at Brgy. Labuin, Sta. Cruz, Laguna. Samahang Nagkakaisa ng Labuin Homeowners Association, Inc. with Tax Identification Number 204-058-620-000, on the other hand, is a homeowner's organization registered with the Home Insurance and Guaranty Corporation with Registration No. 04-2844. On July 6, 2009, the parties executed a "Bilihang Lubusan ng Lupa" whereby the owner transfers and conveys the subject properties to Samahang Nagkakaisa ng Labuin Homeowners Association, Inc. at an agreed price of One Million Six Hundred Twenty Four Thousand Seven Hundred Nineteen and 85/100 Pesos (P1,624,719.85). Moreover, pursuant to a certification issued by National Housing Authority, the abovementioned purchase of property is under the Community Land Acquisition Support Program (CLASP) of the National Housing Authority and classified under the Socialized Housing Program of the Government. In reply, please be informed that pursuant to Section 20 of RA No. 7279, pertinent portions of which state that: "Sec. 20. Incentives for Private Sector Participating in Socialized Housing . To encourage greater private sector participation in socialized housing and further reduce the cost of housing units for the benefit of the underprivileged and homeless, the following incentives shall be extended to the private sector: (d) Exemption from the payment of the following: (2) Capital gains tax on raw lands used for the project; xxx xxx xxx." the landowners who sold their properties for use in a socialized housing project are exempt from the payment of capital gains tax. Such being the case, the sale of the aforestated properties is exempt from the capital gains tax. Upon issuance of this letter of exemption, and upon registration of the document of sale, a lien on the Certificates of Title of the lands to be issued in the name of the Homeowners Association shall be caused to be annotated by the Register of Deeds having jurisdiction over the properties, to the effect that the said properties shall be used for socialized housing pursuant to R.A. No. 7279. (BIR Ruling No. 130-10 dated December 1, 2010) However, the documentary stamp tax is not one of the taxes covered by the tax exemption clause in Sec. 20 RA 7279. Accordingly, Josefina Becina Lo married to Agustin Lo is liable to pay the documentary stamp tax on the document conveying the afore-stated properties imposed under Section 196 of the Tax Code of 1997, based on the consideration contracted to be paid for such realties or their fair market value determined in accordance with Section 6 (E) of the said Code, whichever is higher. (BIR Ruling No. 130-10 dated December 1, 2010) CDaSAE It is, however, understood that this ruling is never intended and shall not be construed as giving authority to the concerned Register of Deeds to effect transfer of the land titles in the name of the buyer without the necessary certificate of authority to register issued by this Bureau. In this regard, this ruling shall be presented to the Revenue District Office (RDO) concerned in order for the latter to issue the Certificate Authorizing Registration (CAR). The CAR shall only be issued after the submission of the requirements provided under RMO 15-2003. (BIR Ruling No. 040-10 dated August 27, 2010) Notwithstanding the foregoing, the Bureau of Internal Revenue shall conduct verification and post-audit that the actual occupants of the properties transferred under the CLASP are qualified beneficiaries 1 and therefore, the seller is entitled to exemption from capital gains tax or income tax imposed under the Tax Code of 1997. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be ascertained that the facts are different, then this ruling shall be considered as null and void. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue ANNEX Samahang Nagkakaisa ng Labuin Homeowners Association, Inc . Brgy. Labuin, Sta. Cruz, Laguna Blk. No. Lot No. Total Area Name of Beneficiary (sq.m.) 1. Primitiva C. Enriquez 1 1 86 2. Reynante A. Meras 2 42 3. Imelda A. Alvarez-Meras 3 46 4. Rolando S. Reyes 4 84 5. Alex T. Cortez 5 67 6. Teresita C. Santos-Rubiales 6 73 7. Mario S. Basa 7 57 8. Danilo A. Cortez 8 65 9. Gertrudez C. Santos-Alvarez 9 82 10. Felicisima S. Alvarez 10 66 11. Simproso S. Lamis Sr. 11 155 12. Emerlita S. Burgonos 12 76 13. Joey E. Alvarez 13 46 14. Dolorez E. Alvarez-Rubliado 14 56 15. Ronilo A. Alvarez 15 55 16. Agripino C. Falcon 16 76 17. Marvin M. Basa 2 1 40 18. Leonel E. Rubliado 2 92 19. Romeo A. Florez 3 68 20. Edna S. Delos Reyes 3 1 73 21. Joel C. Delos Reyes 2 28 22. Paulino S. Rubiales 3 44 23. Marcelino M. Panggat 4 144 24. Zenaida M. Panggat-Lintac 5 94 25. Leandro P. De Leon 6 102 26. Gaudencio M. Panggat 4 1 138 27. Nestor A. Valenzuela 2 68 28. Heirs of Pedro P. Lubrica 3 84 29. Cesar B. Santiago 4 55 30. Melania C. Falcon-Villacampa 5 50 31. Mario Y. Casuga 6 35 32. Gaudencia S. De Leon 7 47 33. Heirs of William A. Falcon 8 77 34. Democrito E. Cortez 9 80 35. Celestina C. Falcon 10 95 36. Virginia G. Cortez 11 58 37. Dante C. Salazar 12 59 38. Francisco T. Salazar 13 130 39. Jimmy T. Cortez 14 37 40. Ronilo T. Nitural 15 45 41. Sonny T. Cortez 16 62 42. Elino G. Cortez 17 61 43. Reynate T. Noble 18 21 44. Felipina R. Cortez 19 37 45. Efren F. Tabia 20 36 46. Conrado T. Cortez 4 21 37 47. Violeta G. Cortez 22 61 48. Gemma G. Tipo 5 1 78 49. Casiano F. De Leon 2 73 50. Eduardo P. Lintac 3 68 51. Fernando B. De Leon 4 58 52. Rodelio C. Falcon 5 70 53. Ferdinand E. Estrada 6 69 54. Edwin S. Alvarez 7 67 55. Brixcio S. Alvarez 8 47 56. Ronie F. Fallceso 9 25 57. Gina D. Tipo 6 1 89 58. Patricia F. Cuenca 2 82 59. Joseph T. Cortez 3 54 60. Emmanuel A. Meras 4 41 Footnotes 1. See Annex for the masterlist of qualified beneficiaries.