BIR Ruling No. 314-13

August 7, 2013 BIR RULING NO. 314-13 RA No. 7279; BIR Ruling No. 109-13 Bolinao Homeowners Association, Inc. Sitio Hinapao, Brgy. San Jose, Antipolo City Attention: Cherry Ann Maoza President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of Social Housing Finance Corporation (SHFC) dated February 18, 2013, endorsing the sale transaction between Jennifer D. Bolinao and Bolinao 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". CSIcHA Documents submitted disclose that Jennifer D. Bolinao (TIN 426-471-733-000) (hereinafter referred to as landowner) is the registered owner of a parcel of land, identified as Lot 4-B of the subdivision plan (LRC) Psd-157044, being a portion of Lot 4, Blk. 10 (LRC) Psd-27979, LRC Rec. No. (Free Pat.) covered by Transfer Certificate of Title (TCT) No. N-50793 issued by the Registry of Deeds for City of Marikina. The aforesaid property is situated at Sitio Hinapao, Brgy. San Jose, Antipolo City with an area of Five Hundred square meters (500 sq.m.), more or less. Bolinao Homeowners Association, Inc. (TIN 298-224-482-000), on the other hand, is a homeowner's organization duly registered with the Housing and Land Use Regulatory Board (HLURB). On November 23, 2012, the parties executed a Deed of Absolute Sale whereby the owner transferred and conveyed the subject property to Bolinao Homeowners Association, Inc. at an agreed price of Nine Hundred Thousand Pesos (P900,000.00). Pursuant to the certification issued by SHFC, the property covered by TCT No. N-50793 is actually a Community Mortgage Program (CMP) Project and shall be proportionately distributed to the association's sixteen (16) qualified member-beneficiaries. 1 For this purpose, Bolinao 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). In support of its request, Bolinao Homeowners Association, Inc. has completely submitted on June 21, 2013 the following documents: 1) SHFC letter application for tax exemption; 2) Certification of the President of the SHFC that the subject property qualifies and is actually a CMP project; 3) Certified true copy of the Letter-Guaranty; 4) Certified true copy of the Deed of Absolute Sale to the Community Association; 5) Certified True Copy of the Articles of incorporation of the Community Association; 6) Certified True Copy of the Masterlist of Qualified Beneficiaries duly certified by the SHFC; DEIHAa 7) Certified True Copy of the TCT and Latest Tax Declaration of the Property Sold to the Community Association; 8) Location Plan of the Lot Sold to the Community Association; 9) TIN ID/BIR Certificate of Registration of the seller and the Homeowner Association; and 10) Other pertinent documents . 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 Bolinao Homeowners Association, Inc. of the aforestated property covered by TCT No. N-50793 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) 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) ECHSDc 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. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue ANNEX Bolinao Homeowners Association, Inc. Sitio Hinapao, Brgy. San Jose, Antipolo City Name of Beneficiary Blk. No. Lot Total Area No. (sq.m.) 1 BUYNAY, EVELYN V. 4 1 31.25 2 BERNANTE, ZENITH E. 4 2 31.25 3 TAROBAGO, VIOLETA SJ. 4 3 31.25 4 ARINGO, ARNEL B. 4 4 31.25 5 SUYOM, CHARLAINE C. 4 5 31.25 6 ALMOSERA, ROSEMARIE M. 4 6 31.25 7 ALMOCERA, CHARO M. 4 7 31.25 8 ALMONTE, SAHLEE B. 4 8 31.25 9 SALIVA, SELVINO A. 4 9 31.25 10 VERGARA, ALMA SJ. 4 10 31.25 11 MAOZA, CHERRY ANN M. 4 11 31.25 12 LAKSAMANA, NANY B. 4 12 31.25 13 CAMACHO, DINA R. 4 13 31.25 14 LUCIANO, ROGER Y. 4 14 31.25 15 RAMOSO, DESIREE R. 4 15 31.25 16 ALBORTE, VIVIAN R. 4 16 31.25 Footnotes 1. See Annex for the masterlist of qualified beneficiaries.