Tax Consequence of the Sale of a Parcel of Land

August 9, 1988 BIR RULING NO. 379-88 21 (2) 343-87 379-88 M a d a m : This refers to your letter dated December 8, 1987 requesting confirmation of your opinion to the effect the sale of a parcel of land covered by TCT No. C-8535 made by Ma. Magdalena Santos together with Mrs. Josefina Ricardo as accommodating party, in favor of your son, Mr. Monico E. Gonzalez is not subject to the capital gains tax. cdt It is represented that your son bought the aforesaid parcel of land under a "sale with right to repurchase" agreement executed on February 3, 1978; that upon the expiration of the one (1) year redemption period, your son petitioned the Regional Trial Court of Caloocan City, Branch 121 for the cancellation of the annotation of the aforesaid right to repurchase appearing on the title of said parcel of land; that on December 3, 1987, the Court issued an order approving your son's petition and the issuance of a new title in the name of your son; and that the Register of Deeds of Caloocan City refused to register the title to the said parcel of land in the name of your son unless a certificate is issued by this office showing that the capital gains tax due on the aforementioned sale is submitted. In reply, please be informed that Section 8 of Revenue Regulations No. 8-79 implementing then Section 34(h) of the Tax Code, as amended by Batas Pambansa Blg. 37 provides that the imposition of a final schedular tax on capital gains realized by citizens and resident aliens from sales or other disposition of real property shall apply to transactions entered into on or after September 7, 1979. Moreover, a deed of conveyance of real property acknowledged before a notary public on or after September 7, 1979 shall be deemed to be a sale or disposition of real property on or after September 7, 1979. Accordingly, and inasmuch Ms. Magdalena Santos together with Mrs. Josefina Ricardo, as accommodating party, sold her aforementioned property on February 3, 1978, she is not required to file the capital gains tax return and pay the final schedular capital gains tax prescribed by then Section 34(b) of the Tax Code, as amended by B.P. No. 37. However, proof must be submitted to the effect that Ms. Magdalena Santos has included whatever gains she may have realized from the aforesaid sale of her property in her 1978 income tax return and the tax, therefore, has been paid. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner