Tax Consequence in the Documentation of the Purchase of a Condominium Unit

June 1, 1988 BIR RULING NO. 225-88 21 (e) 000-00 225-88 S i r : This refers to your letter dated July 1, 1987 requesting a ruling on the tax consequence in the documentation of the purchase of a condominium unit. It is represented that Marnes Commercial Corporation purchased from Mr. John L. McGurk a condominium unit designated as Apartment No. 22 of the New Alabang Townhouses Condominium Project; that Marnes paid the full consideration of P1,250,000 in three separate checks; that instead of preparing a single document of sale covering said purchase, the seller prepared two deeds of sale one covering the sale of condominium unit for P700,000.00, and another covering the sale of alleged "furnishings, carpetings, furnitures, appliances, curtains and all other contents" for P550,000.00; that, except for two (2) built-in-fans, 1 curtain and a carpet, there are no existing furnishings; and that the condominium unit was actually bought bare by Marnes. In reply, please be informed that, based on your representation that the unit was actually bought bare by your client, Marnes Commercial Corporation, the transaction is considered a single sale involving real property classified as a capital asset; hence, the total consideration of P1,250,000.00 is subject to the 5% capital gains tax imposed by Section 21(e) of the Tax Code. Such being the case, said total consideration of P1,250,000.00 is the cost basis of the property in case of future sale by Marnes. cdtech Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner