Napico Homeowners Association XIII, Inc.

June 5, 2009 BIR RULING [SH-(048) 362-09] 20 RA 7279; S20-111-2000 Napico Homeowners Association XIII, Inc. Rhodora corner Rosal Sts.,Zone 5 Phase 3, Napico, Manggahan, Pasig City Attention: Mr. Ferdinand B. Mejia President Gentlemen : This refers to your letter dated November 13, 2008 requesting for capital gains tax exemption on the transfer of a parcel of land in favor of the member-beneficiaries of NAPICO HOA XIII, INC. It is represented that a parcel of land covered by Certificate of Title No. PT-119333 located at Rhodora St.,cor. Rose St. Napico Manggahan, Pasig City is registered in the name of NAPICO HOA XIII, INC. with TIN 003-980-240; and that said parcel of land was acquired through a loan under the Community Mortgage Program with the National Housing Authority as Originator. In reply, please be informed that the transfer in favor of the individual member-beneficiaries of the above-described property is not subject either to capital gains tax imposed under Section 24 (D) (1) of the Tax Code of 1997 or 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 without any consideration since it is merely a formality to finally effect the transfer to the said property from the Association to the member-beneficiaries who actually bought the same. In other words, the Association is in fact transferring the ownership of the property to the member-beneficiaries who actually own the same. It is, however, understood, that the Certificate Authorizing Registration (CAR) shall only be issued after is it 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 lots in this case does not exceed P400,000 for each qualified beneficiaries. SEIDAC Moreover, the transfer is not subject to the donor's tax imposed under Section 99 of the Tax Code of 1997, considering that the Association could not donate a property of ownership which belongs to the transferees (member-beneficiaries) themselves. Section 185 of Regulations No. 26, otherwise known as the Revised Documentary Stamp Tax Regulations, implementing Title VII of the Tax Code. Provides that conveyances of realties not in connection with a sale, to trustees of other persons without consideration are not taxable. Accordingly the deed to be executed by the Association to effect the aforesaid transfer in favor of its member-beneficiaries is not subject to the documentary stamp tax imposed under Section 196 of the Tax Code of 1997. However, the notarial acknowledgement to said deed of conveyance is subject to the documentary stamp tax of P15.00 pursuant to Section 188 of the same Code. 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