Sale of Residential House & Lot for Less than P500, 000 Subj. to 0% CWT

October 21, 1993 BIR RULING NO. 421-93 SALE OF RESIDENTIAL HOUSE & LOT FOR LESS THAN P500,000 SUBJ. TO 0% CWT 50 (b) 330-93 421-93 Subic Realty Corporation Subic, Zambales Attention: Mr . Florentino Caja President This refers to your letter dated July 13, 1993 asking for a ruling as to the applicability of 0% or 2.5% creditable withholding tax on your sale of individual house and lot at Subic Hills Village, Aningway, Subic, Zambales. It is represented that your company is engaged in the real estate business, and a member of the Subdivision and Housing Developers Association of the Philippines (SHDA); that your project at Subic Hills Village, Aningway, Subic, Zambales, is a Socialized Housing Project as certified by the Housing and Urban Development Council (HUDCC) dated May 14, 1993; that it is duly covered by Development Permit Nos. 9-0111 and 90-0218 issued by the Housing and Land Use Regulatory Board (HLURB) in conformity with B.P. 220; that your project is also covered by a Certificate of Registration No. 90-05-450 and License to Sell No. 90-05-459; that your normal selling price ranges from P150,000.00 to less than P500,000.00 as evidenced by your Deeds of Absolute Sale with your various customers, hence, this request. In reply, please be informed that under paragraph Nos. 2 and 3, Revenue Memorandum Circular No. 7-90, as amended by Revenue Memorandum Circular No. 16-90, clarifying some pertinent provisions of Revenue Regulations No. 18-89, as amended by Revenue Regulations No. 1-90, implementing Section 50(b) of the Tax Code, as amended, in order to remove the bias against low-cost housing projects registered under PD No. 957 and to simplify tax administration, all sales, exchanges or transfers of real property on or after March 1, 1990 shall be subject to zero (0%) percent, regardless of the law under which the project is registered, provided that the consideration does not exceed P500,000. In other words, it is the selling price or consideration (and not the law under which a project was approved) that determines whether or not a transaction is socialized/low-cost in nature. Moreover, to be entitled to the lower withholding tax rate of 0% or 2.5%, the presentation of the Certificate of Registration and License to Sell for a subdivision or condominium project issued by the Housing and Land Use Regulatory Board (HLURB) shall be sufficient proof for purposes of the required Housing and Urban Development Coordinating Council (UUDCC)/HLURB Certification in the regulations (Revenue Regulations No. 12-89, as amended by Revenue Regulations No. 1-90). Such being the case, and since your residential subdivision project at Subic Hills Village located at Aningway, Subic, Zambales, is registered with the Housing and Land Use Regulatory Board under Certificate of Registration No. 90-05-450, and was issued with its corresponding License to Sell under License to Sell No. 90-05-459 coupled with the sale thereof ranging from P150,000.00 to less than P500,000.00 per unit (house and lot), this Office is therefore, of the opinion as it hereby holds that your sale of your residential house & lot at Subic Hills Village, Aningway, Subic, Zambales, that are within the range of P150,000.00 to less than P500,000.00, to be verified to be within such price range by the Revenue District Officer where the property is located, is subject to the 0% creditable withholding tax imposed under Revenue Regulations No. 1-90 implementing Section 50(b) of the Tax Code. This renders inapplicable the use of the zonal valuation as well as the revised zonal valuation of the aforesaid project as tax base in computing the creditable withholding tax on your sale thereof. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, and/or any of the requirements imposed in this letter are not complied with, then this ruling shall be considered null and void. LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue