BIR Ruling No. 647-12

December 7, 2012 BIR RULING NO. 647-12 R.A. 7279; BIR Ruling No. 121-11 National Housing Authority Regional Office No. 10 Julio Panaca St., Cagayan de Oro City Attention: Judy A. Fernandez OIC-Regional Manager Gentlemen : This refers to your letter dated February 23, 2011 requesting for a ruling that the sale of three (3) parcels of land to the National Housing Authority (NHA) under its Local Housing Program (LHP) is exempt from the capital gains tax and documentary stamp tax pursuant to Republic Act (RA) No. 7279 otherwise known as the "Urban Development and Housing Act of 1992." IDSaTE Documents submitted show that a Deed of Absolute Sale and Conveyance dated January 11, 2011 was executed between the NHA and several individuals in which the latter sold to the former three (3) parcels of land described as follows: 1. Lot No. 3128-E covered by Transfer Certificate of Title (TCT) No. T-207074 with an area of 3,155 square meters located at Brgy. Balulang, Cagayan de Oro City registered under the names of Rowena N. Vila, Patricia V. Cordero married to Benjamin Cordero, Norberto N. Vila and Erlinda S. Vila; 2. Lot No. 3128-D covered by TCT No. T-122768 with an area of 3,073 square meters located at Brgy. Balulang, Cagayan de Oro City and registered under the names of Manuel L. Neri, Antonio L. Neri, Ma. Lourdes Suzette M. Maclang and Ma. Carmen N. Panlilio; and 3. Lot No. 3128-C covered by Original Certificate of Title (OCT) No. P-3786 with an area of 2,976 square meters located at Brgy. Balulang, Cagayan de Oro City and registered under the name of Soledad N. Aguirre. that the said acquisition is made pursuant to NHA's implementation of socialized housing projects in urban and urbanized areas in all Congressional Districts pursuant to Housing and Urban Development Coordinating Council (HUDCC) Resolution No. 001, Series of 2001, approving the adoption of the Implementing Rules and Regulations of Rule 8-LHP of RA 7835 and NHA Board Resolution No. 4485 dated January 10, 2002; that the NHA purchased said properties in full conformity that the acquisition and resale of the lands subject thereof in favor of the targeted beneficiaries will be through the Sites and Services Program of the NHA using Local Housing Fund as the fund source; that the Office of the First Congressional District, Cagayan de Oro City, has allocated the amount of Ten Million Five Hundred Five Thousand Two Hundred Fifty Pesos (P10,505,250.00) to NHA-Hawak Kamay Multi-Purpose Cooperative Housing Project under the LHP for the acquisition of six (6) parcels of land; and that due to funding limitations, the payment of the said parcels of land was split into two tranches, with the first tranche of payment allocated for the three (3) parcels of land described above. cACDaH In reply, please be informed that under Sections 19 and 20 of R.A. No. 7279, it is provided, to wit: "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 the transfer certificates of title. (emphasis supplied) "SEC. 20. Incentives for Private Sector Participating in Socialized Housing . To encourage greater participation in socialized housing and further reduced 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: (1) Project-related income taxes; (2) Capital gains tax on raw lands used for the project; "xxx xxx xxx" Based on the above provision, the sale to the NHA of the three (3) parcels of land under the NHA's Local Housing Program is exempt from the payment of capital gains tax and documentary stamp tax (DST) pursuant to Sections 19 and 20 of R.A. No. 7279. However, the notarial acknowledgement to said deed of conveyance is subject to the DST of P15.00 pursuant to Section 188 of the 1997 Tax Code, as amended. (BIR Ruling No. 121-11 dated April 12, 2011) AHacIS Upon issuance of this letter of exemption, and upon registration of the document of sale, a lien on the Certificates of Title of the said parcels of land, which shall be issued in the name of the NHA, shall be caused to be annotated by the Register of Deeds having jurisdiction over the properties to the effect that the said properties shall be used for socialized housing pursuant to R.A. No. 7279. (BIR Ruling No. 121-11 dated April 12, 2011) 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 of Internal Revenue