Tax Consequence of a Transfer of Title upon Consolidation of Ownership

October 21, 1988 BIR RULING NO. 516-88 21 (e) 343-87 516-88 Gentlemen : This refers to your letter dated August 25, 1988 requesting that a certificate authorizing transfer of title without prepayment of capital gains tax be issued in your favor relative to your consolidation of ownership over the properties of Benito and Aurelia Balagtas which you have foreclosed in 1974. 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. 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 as (spouses) Benito and Aurelia Balagtas sold their aforementioned properties in 1974, they are not required to file the capital gains tax return and pay the final schedular capital gains tax prescribed by then Section 34(h) of the Tax Code, as amended by B.P. No. 37. However, proof must be submitted to the effect that (spouses) Benito and Aurelia Balagtas had included whatever gains they may have realized from the aforesaid foreclosure sale of their properties in their 1974 income tax return and the tax, therefore, has been paid. (BIR Ruling No. 343-87) Moreover, the Sheriff's Certificate of Sale is subject to documentary stamp tax at the rates then in force, i.e., P0.75 if the consideration exceeds P200 but does not exceed P1,000 and P300 for each additional P1,000 or fractional part in excess of P1,000 of such consideration pursuant to then Section 233 (now Section 196) of the Tax Code. Upon payment of the required documentary stamp tax on the said Sheriff's Certificate of Sale, this Office will interpose no objection to the transfer of title in you favor. cdtech Very truly yours, (SGD.) EUFRACIO D. SANTOS Deputy Commissioner