Transfer/Conveyance of Common Areas in a Condominium Without Consideration - Not Subject to Documentary Stamp Tax

May 14, 1993 BIR RULING NO. 212-93 TRANSFER/CONVEYANCE OF COMMON AREAS IN A CONDOMINIUM WITHOUT CONSIDERATION NOT SUBJECT TO DOCUMENTARY STAMP TAX 21 (c) 196 041-92 212-93 Far East Asia Development Corporation Rm. 602, Far East Asia Building 416 Marquina Street Binondo, Manila Attention: Mr . Alexander T . Go President This refers to your letter dated February 7, 1993, requesting information as to whether in the transfer or conveyance by the Far East Asia Development Corporation (FEADCO) to the Solex Condominium II Association, Inc. (SOLEX II) of the common areas of the Solex Condominium II Building, a deed of assignment is the proper document to execute, and whether the said transfer or conveyance is subject to the documentary stamp tax. cdtech Documents submitted show that FEADCO is the absolute owner of eight (8) parcels of land situated in the City of Manila. Covered by Transfer Certificate of Title No. 16470; that it has developed and constructed on these parcels of land a condominium project; that SOLEX II was constituted and formed purposely to manage the project; that pursuant to a Deed of Assignment executed on November 22, 1991, FEADCO shall assign to and in favor of SOLEX II its rights, including the ownership of the eight (8) parcels of land, and that the assignment is without any monetary consideration because under the Master Deed and Declaration of Restrictions, dated April 18, 1988, the eight (8) parcels of land are considered part of the condominium project to be managed and held by the latter. In reply, please be informed that "conveyance of realty not in connection with a sale of trustees or other persons without consideration is not taxable" (Sec. 185, Regulations No. 26, or the Documentary Stamp Tax Regulations, as amended). In this case, the Deed of Assignment in question is without consideration and the conveyance is not in connection with a sale made to the condominium corporation. In fact, sales by FEADCO of the condominium units were made in favor of the individual unit owners of the condominium project, and the purpose of the assignment to the condominium corporation (SOLEX II) is for the management of the project for the common benefit of the unit owners (Section 10, R.A. No. 4726, Condominium Act). In view thereof, this Office is of the opinion as it hereby holds that the transfer and conveyance to the Solex Condominium II Association, Inc. of the common areas of said condominium building without consideration should be made by virtue of a Deed of Assignment which is not subject to the documentary stamp tax imposed by Section 196 of the Tax Code, as amended. However, the acknowledgment is subject to the documentary stamp tax on certificate in the amount of P3.00 pursuant to Section 188 of the Tax Code, as amended (BIR Ruling No. 45-87). VICTOR A. DEOFERIO, JR. Deputy Commissioner of Internal Revenue