BIR Ruling No. 303-13

August 6, 2013 BIR RULING NO. 303-13 RA No. 7279; BIR Ruling No. 109-13 Kay Palad Homeowners' Association, Inc. Sitio Hinapao, Brgy. San Jose, Antipolo City Attention: Yulvin O. Pelaez President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of Social Housing Finance Corporation (SHFC) dated January 21, 2013, endorsing the sale transaction between Norma Robiso and Kay Palad Homeowners' Association, Inc. for exemption from the payment of Capital Gains Tax and other taxes in accordance with the Republic Act (RA) No. 7279, otherwise known as the "Urban Development and Housing Act of 1992". Documents submitted disclose that Norma Robiso (TIN 110-675-745-000) married to Jaime Robiso (hereinafter referred to as landowner) is the registered owner of a parcel of land, identified as Lot 6-A of the subd. plan (LRC) Psd-185078, being a portion of Lot 6 Blk. 7 (LRC) Psd-27979, LRC Rec. No. F. Pat. covered by Transfer Certificate of Title (TCT) No. 347609 issued by the Registry of Deeds for City of Marikina City. The aforesaid property is situated at Sitio Hinapao, Brgy. San Jose, Antipolo City with an area of Five Hundred Six Three square meters (563 sq.m.), more or less. Kay Palad Homeowners' Association, Inc. (TIN 297-470-180-000), on the other hand, is a homeowner's organization duly registered with the Housing and Land Use Regulatory Board (HLURB). On September 12, 2012, the parties executed a Deed of Absolute Sale whereby the owner transferred and conveyed the subject property to Kay Palad Homeowners' Association, Inc. at an agreed price of Eight Hundred Forty Four Thousand Five Pesos (P844,500.00). n Pursuant to the certification dated September 11, 2012 issued by SHFC, the property covered by TCT No. 347609 is actually a Community Mortgage Program (CMP) Project and shall be proportionately distributed to the association's seventeen (17) qualified member-beneficiaries. 1 For this purpose, Kay Palad Homeowners' Association, Inc. secured a housing loan under the CMP, a financing assistance program of the SHFC a subsidiary of the National Home Mortgage Finance Corporation (NHMFC). SEHaDI In reply, please be informed that pursuant to Section 32 of RA No. 7279, pertinent portions of which state that: "Sec. 32. Incentives . To encourage its wider implementation, participants in the CMP shall be granted with the following privileges or incentives: xxx xxx xxx (b) Properties sold under the CMP shall be exempted from the capital gains tax; and" 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 by the landowner to Kay Palad Homeowners' Association, Inc. covered by TCT No. 347609 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 Certificate of Title of the land 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 property, to the effect that the said property shall be used for socialized housing pursuant to RA No. 7279. (BIR Ruling No. 109-13 dated March 21, 2013) ASaTHc However, the documentary stamp tax is not one of the taxes covered by the tax exemption clause in Sec. 20 of RA 7279. Accordingly, the owner is liable to pay the documentary stamp tax on the documents conveying the afore-stated property imposed under Section 196 of the Tax Code of 1997, based on the consideration contracted to be paid for such realty or its fair market value determined in accordance with Section 6 (E) of the said Code, whichever is higher. (BIR Ruling No. 109-13 dated March 21, 2013) 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 title 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. Notwithstanding the foregoing, the Bureau of Internal Revenue shall conduct verification and post-audit that the actual occupants of the property transferred under the CMP are qualified beneficiaries 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. TIEHSA Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue ANNEX Kay Palad Homeowners' Association, Inc. Sitio Hinapao, Brgy. San Jose, Antipolo City Blk. No. Lot Total Area Name of Beneficiary No. (sq.m.) 1 CANILLO, NANCY F. 6a-1 32.294 2 MURILLO, ALMA C. 6a-2 32.294 3 MENDOZA, MARLON B. 6a-3 32.294 4 CALDERON, EVELYN D. 6a-4 32.294 5 MILAN, ROSE ANN S. 6a-5 32.294 6 ALCAZARIN, MARVIN C. 6a-6 32.294 7 SUYOM, ESPERANZA D. 6a-7 32.294 8 LLEDO, ISRAEL P. 6a-8 32.294 9 CHAVEZ, EUFEMIA 6a-9 31.794 10 MANGILIT, EDWIN A. 6a-10 37.294 11 LARGO, TERESITA C. 6a-11 33.294 12 CARTAJENA, JOCELYN T. 6a-12 32.294 13 DELDA, ELDILYN C. 6a-13 32.294 14 CARTAJENA, MELANI T. 6a-14 32.294 15 GARCIA JR., LORENZO A. 6a-15 32.294 16 ALENDAYU JR., JOSE O. 6a-16 31.794 17 PELAEZ, YULVIN O. 6a-17 41.294 Footnotes 1. See Annex for the masterlist of qualified beneficiaries. n Note from the Publisher: Copied verbatim from the official copy. Discrepancy between amount in words and in figures.