Authority to Pay the Documentary Stamp Tax Based on the Actual Consideration/Selling Price of the House

December 7, 1990 BIR RULING NO. 232-90 196 000-00 232-90 Gentlemen : This refers to your letters dated January 17, 1989 and October 1, 1990, requesting in behalf of NHA target beneficiaries, authority to pay the documentary stamp tax based on the actual consideration/selling price of the house and lot instead of the zonal value, for the following reasons: cdta 1. Sales/loans resulting out of the government housing projects are being priced not on the basis of prevailing market values but more on the capacity to pay of target clientele; 2. Target clientele of NHA as mandated under Executive Order No. 90 are those belonging to the lowest 30-50% of the income bracket; 3. Zonal valuation is always higher than actual selling price of the house and/or lot such that resulting fees for documentary stamps on the sale/mortgage if based on the zonal valuation, are unreasonably high especially for persons with limited affordability. In reply, please be informed that Revenue Audit Memorandum Order No. 1-88 presents the manner of computation of the tax base of sale, transfer or other disposition of real property including improvements thereon for purposes of computing internal revenue taxes where the zonal value of the land has/has not been established. On the other hand, Section 196 of the Tax Code explicitly states that the determination of the documentary stamp tax on deeds of sale of real property is to be governed by the amount of the consideration received. Accordingly, in computing the amount of documentary stamp tax payable by you on your sales of house and lots to NHA target beneficiaries, the same should be based on the actual consideration/selling price appearing in the deeds of sale, in accordance with Section 196 of the Tax Code. However, if upon investigation it will be disclosed that the amount of documentary stamp tax payable has been reduced by an incorrect statement of the consideration in the deed of conveyance executed between you and your target beneficiaries, this ruling will be revoked and the true market value or zonal value will be utilized as basis of the documentary stamp tax. cd Very truly yours, (SGD.) VICTOR A. DEOFERIO, JR. Deputy Commissioner