BIR Ruling No. 482-14

December 3, 2014 BIR RULING NO. 482-14 RA 7279; BIR Ruling No. 383-13 Roque Compound Phase II Kapit-Bisig Homeowners Association, Incorporated Himlayan Road Pasong Tamo Tandang Sora, Quezon City Attention: Rey Belicena President Gentlemen : This refers to your undated letter requesting exemption from the payment of Capital Gains Tax and other taxes, relative to the transfer of title of land from Roque Compound Phase II Kapit-Bisig Homeowners Association, Incorporated in favor of Mr. Carlos A. Alinan pursuant to Republic Act 7279 otherwise known as the "Urban Development and Housing Act of 1992". It is represented that Roque Compound Phase II Kapit-Bisig Homeowners Association, Incorporated is the registered owner of the parcel of land identified Lot 5 Block 2 of the subdn. Plan Psd-00-063078 containing an area of forty seven square meters (47 sq.m.) covered by Transfer Certificate of Title (TCT) No. N-270471 issued by the Registry of Deeds for the Quezon City, located at Brgy. Pasong Tamo, Tandang Sora, Quezon City; that it is a non-stock, non-profit organization duly registered with the Housing and Land Use Regulatory Board (HLURB); that the aforesaid lot was acquired through a loan under the Community Mortgage Program (CMP) of the Social Housing Finance Corporation (SHFC); that said project was taken-out/paid on June 18, 1998 in the amount of Php1,000,000.00; that Mr. Carlos A. Alinan is one of the beneficiaries therein; that the SHFC issued a Partial Release of Real Estate Mortgage constituted described in TCT No. N-270471 dated October 16, 2013; and that Mr. Carlos A. Alinan is now in the process of transferring the purchased property to his name by virtue of a Deed of Sale dated September 12, 2013. In support of your request, you have completely submitted on March 5, 2014 the following documents: 1) Written Application for Exemption filed with the Law Division; 2) Deeds of Absolute Sale; 3) Certified True Copies of the Transfer Certificate of Title (TCT); 4) Certification from the Social Housing Finance Corporation (SHFC) that the property was acquired through CMP; 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; DACIHc 7) Certificates of Payment; 8) Partial Release of Real Estate Mortgage; 9) BIR Certificate of Registration; 10) Other pertinent documents. In reply, please be informed that the transfer in favor of your individual member-beneficiaries of the said subdivided properties is not subject to either the capital gains tax imposed under Section 27 (D) (5) of the Tax Code of 1997, as amended, or the creditable withholding tax imposed under Revenue Regulations No. 2-98, as amended, implementing Section 57 (B) of the same Code, considering that the said transfer is merely a formality to finally effect the transfer of the said properties to your member-beneficiaries who actually bought the same from the former owner through your Association. In other words, the association is in fact transferring the ownership of the property to its member-beneficiaries who actually own the same. Furthermore, the said transfer is not subject to the donor's tax imposed under Section 99 of the Tax Code of 1997, since there is no donative intent or intention on your part to donate the said property to said member-beneficiary, considering that you could not donate property the ownership of which belongs to the donee (member-beneficiary) himself. (BIR Ruling No. 383-13 dated October 22, 2013) It is noted that under Section 196 of the Tax Code of 1997, the deeds or documents subject to the documentary stamp tax imposed therein are those where the realty sold shall be granted, assigned, transferred, or otherwise conveyed to a purchaser or purchasers or to any other person or persons designated by such purchaser or purchasers, thereby excluding from its purview the instant case considering that the supposed purchaser is actually the owner thereof. Accordingly, the transfer of title of the said property is not subject to the documentary stamp tax imposed under Section 196 of the Tax Code of 1997. However, the notarial acknowledgment to said deed of conveyance is subject to the documentary stamp tax of P15.00 pursuant to Section 188 of the Tax Code of 1997. (BIR Ruling No. 383-13 dated October 22, 2013) SDATEc It is, however, understood that the Certificate Authorizing Registration (CAR) shall only be issued after the submission of the requirements provided under RMO15-2003 and after it is established upon proper verification by the Revenue District Officer (RDO) concerned that, considering the rules on valuation of real property, the actual selling price per sale transaction of the house and lot packages in this case does not really exceed P450,000.00 and P180,000.00 for lot only. Thus, sale of a house and lot or lot only above the maximum amount shall be subject to the corresponding internal revenue taxes. (BIR Ruling No. 383-13 dated October 22, 2013) 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. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner Bureau of Internal Revenue