BIR Ruling No. 446-12

July 10, 2012 BIR RULING NO. 446-12 RA 7279; BIR Ruling No. 066-2011 Sps. Alan M. Renton & Rowena P. Renton Brgy. Pinagkuartelan, Pandi, Bulacan Gentlemen : This refers to your letter dated March 7, 2012, requesting tax exemption on the transfer of title of the purchased property to National Housing Authority, pursuant to Republic Act (R.A.) No. 7279, otherwise known as the "Urban Development and Housing Act of 1992". Documents submitted show that Sps. Alan M. Renton and Rowena P. Renton are the registered owners of a parcel of land covered by Transfer Certificate of Title (TCT) No. T-290075 and designated as lot 2962-C-2-A-2-B of the subd. plan LRA Psd-408625 approved as a non-subd. project, being a portion of lot 2962-C-2-A-2 LRC Psd-220498 LRC Rec. No. 5314 issued by the Registry of Deeds for the Province of Bulacan. The aforestated lot is located at Brgy. Matang-tubig, Baliuag, Bulacan containing an area of eight hundred sixty eight square meters (868 sq.m.) more or less. The National Housing Authority, on the other hand, is a government corporation created and existing by virtue of Presidential Decree No. 757, as amended. On February 16, 2012, a Deed of Absolute Sale was executed by and between Sps. Alan M. Renton and Rowena P. Renton and the National Housing Authority transferring the six hundred sixty eight square meters (668 sq.m.) of the subject realty in consideration for three million pesos (P3,000,000.00). AaECSH On October 5, 2011, a Memorandum of Agreement (Local Housing Project for the Second Congressional District, Bulacan) was executed by the National Housing Authority, the Office of the Second Congressional District of Bulacan and the Holy Family of Baliuag Homeowners Association, Inc. Phase I. The project shall cover the land acquisition of 666.78 square meter, (15 residential lots and 1 roadlot) portion of the subject realty. Under the MOA, the NHA shall allocate the amount of P3,000,000.00 from the Comprehensive and Integrated Shelter Financing Act (CISFA) Fund released to it, as its total contribution to the Local Housing Program (LHP) Project allocated to the Second Congressional District of Bulacan. The project "HFBHOAI Phase I" is intended to provide lot assistance to members of the Holy Family of Baliuag Homeowners Association, Inc. Phase I. In reply, please be informed that pursuant to Sections 19 and 20 of Republic Act (RA) No. 7279, pertinent portions of which state that: "Sec. 19. Incentives for the National Housing Authority. The National Housing Authority, being the primary government agency in charge of providing housing for the underprivileged and homeless, shall be exempted from the payment of all fees and charges of any kind, whether local or national, such as income and realty taxes. All documents or contracts executed by and in favor of the National Housing Authority shall also be exempt from the payment of documentary stamp tax and registration fees, including fees required for the issuance of transfer certificates of title. "Sec. 20. Incentives for Private Sector Participating in Socialized Housing. To encourage greater private sector participation in socialized housing and further reduce the cost of housing units for the benefit of the underprivileged and homeless, the following incentives shall be extended to the private sector: xxx xxx xxx (d) Exemption from the payment of the following: xxx xxx xxx 2) Capital gains tax on raw lands use for the project; xxx xxx xxx" the owner of the raw land is exempt from the payment of capital gains tax or the withholding tax under Revenue Regulations No. 2-98, as amended, on the conveyance of the parcel of land for use in the aforesaid socialized housing project. Such being the case, the sale of the aforestated property by the owner to National Housing Authority, in so far as the six hundred sixty eight square meters (668 sq.m.) portion thereof is concerned is exempt from the capital gains tax. (BIR Ruling No. 066-2011 dated March 9, 2011) AHCaES Moreover, pertinent portions of RMC No. 42-01 dated October 5, 2001, provide, viz. : xxx xxx xxx A. National Housing Authority (NHA) The NHA, being the primary government agency in charge of providing housing for the underprivileged and homeless citizens shall be exempted from the payment of the following national internal revenue taxes: (1) . . . (2) Documentary stamp tax on sales transactions executed by and in favor of the NHA in connection with socialized housing projects. Since Section 19 of R.A. 7279 exempts "all documents or contracts executed by and in favor of the NHA," the exemption from documentary stamp tax extends to the other party (either seller or buyer) that is dealing or transacting with the NHA. xxx xxx xxx The exemption from documentary stamp tax of NHA in connection with any of its socialized housing project extends to the other party (either seller or buyer) that deals or transacts with the NHA. Consequently, since NHA is a party to the sale, no documentary stamp tax shall be due on such sale, either on NHA or the party with which NHA is transacting. Accordingly, the transfer by NHA of its real properties in favor of member-beneficiaries is, likewise, exempt from the payment of documentary stamp tax under Section 196 of the Tax Code of 1997, as amended. Upon application for exemption, a lien on the title of the land shall be annotated by the Register of Deeds having jurisdiction over the property, to the effect that the same is to be applied or is being applied to socialized housing project pursuant to RA 7279. Please take note 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 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) after the submission of the requirement provided under RMO 15-2003. 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, then this ruling shall be considered null and void. cSTHAC Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue