Real Estate Dealers' Fixed Tax Case of Mr. Clotildo S. Rosal

July 29, 1959 BIR RULING NO. 383-59 3rd Indorsement Respectfully returned to the Regional Director, Regional District No. 7, Cebu City, the within papers bearing on the real estate dealers' fixed tax case of Mr. Clotildo S. Rosal. Republic Act 588, which took effect on September 22, 1950, defines 'real estate' dealer as any person engaged in the business of buying, selling, exchanging, leasing, or renting property on his own account as principal and holding himself out as a full or part-time dealer in real estate or as an owner of rental property or properties rented or offered to rent for an aggregate amount of P3,000.00 or more a year. For purposes of said law, the aggregate rental value of the properties to rent and not the actual rental income in any year is considered. Accordingly, if the aggregate rental value of the properties of both husband and wife is more than P3,000.00 per annum, they shall, in their collective capacity, be subject to the real estate dealer's fixed tax even if the actual rental income they received in 1950 was less than P3,000.00; otherwise, they are exempt. For the lease of her paraphernal property, the wife cannot be considered separately engaged in business as a real estate dealer in her individual capacity. This is for the reason that ordinarily, especially in our country, the wife does not actually remove the administration of her paraphernal property from the conjugal partnership. Moreover, the fruits of the wife's separate property belong to the conjugal partnership. It is informed in this connection, however, that, under Republic Act No. 1612, which further amended sections 194(s)and 182(A)(3)(s) of the Tax Code, an owner of rental property is considered a real estate dealer if he receives an actual rental income of P4,000.00 or more a year. (See Gen. Circular No. V-227) (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue