Luzvimin Homeowners Association, Inc.

May 22, 2009 BIR RULING [SH-(046) 343-09] 22 (B); DA-047-2004 Luzvimin Homeowners Association, Inc. Sitio Pulo, Barangay Anabu II-C Imus, Cavite Attention: Mr. Basilio G. Jorge President Gentlemen : This refers to your letter dated April 29, 2009 requesting exemption from the payment of capital gains tax and documentary stamp tax under Revenue Regulations No. 11-97. Documents submitted disclosed that Luzvimin Homeowners Association, Inc. (Association), with Taxpayer's Identification No. 256-269-091-000 is a legal association of underprivileged and homeless citizens organized on December 4, 2007; that it is registered with the Housing and Land Use Regulatory Board under Certificate of Registration No. 13814; that the Association is securing a housing loan under the Community Mortgage Program (CMP), a financing assistance program of the Social Housing Finance Corporation (SHFC), for the acquisition of the lots that its qualified member-beneficiaries occupy; and that a Deed of Absolute Sale has been executed by the Vendors, David T. Ong, Tan Cheng Hai, Carmelita Y. Tan and Kenneth G. Uy, duly represented by their Atty.-In-Fact Johnny K. H. Uy or Manuel Ong Santos and Luzvimin Homeowners Association, Inc. for the sale of a parcel of land containing an area of 12,289 square meter and more particularly described under Transfer Certificate of Title No. T-279400. In reply, please be informed that pursuant to Section 32 of Republic Act (RA) No. 7279, pertinent portions of which read: "Sec. 32. Incentives. To encourage its wider implementation, participants in the CMP shall be granted with the following privileges or incentives: xxx xxx xxx "(b) Properties sold under the CMP shall be exempted from the capital gains tax; and xxx xxx xxx" The owners of the raw lands are exempt from the payment of capital gains tax on the conveyance of the property, corresponding to the portion thereof that will be used in the aforestated socialized housing project. Upon application for exemption, a lien on the titles of the lands shall be annotated by the Register of Deeds having jurisdiction over the properties, to the effect that the same are being applied to socialized housing project pursuant to RA No. 7270. However, the sale is subject to the documentary stamp tax imposed under Section 196 of the Tax Code of 1997, based on the consideration or the fair market value, whichever is higher. SaITHC However, it is observed that documentary stamp tax is not one of taxes covered by the tax exemption clause is Section 20 of RA No. 7279. Such being the case, the project developer/sellers shall be liable to pay the documentary stamp tax on the documents conveying the properties imposed under Section 196 of the Tax Code of 1997, based on the consideration contracted to be paid for such realties or on their fair market value determined in accordance with Section 6 (E) of the said Code, whichever is higher. Moreover, the notarial acknowledgement 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. 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, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service