Freedom to Build, Inc.

July 31, 2009 BIR RULING [SH-(067) 472-09] Sec. 27 (D) (5); S-20-211-95 Freedom to Build, Inc. 2/F Social Communication Center Building R. Magsaysay Blvd., corner Santol St. Sta. Mesa, Manila Attention: Ms. Nightingale T. Keyes President Gentlemen : This refers to your letter dated July 24, 2009 requesting for exemption from the payment of capital gains tax. It is represented that FREEDOM TO BUILD, INC. is committed in developing socialized housing, as it has done in its previous projects. As such, it purchased six (6) parcels of contiguous properties covered by Transfer Certificate of Title Nos. T-370646 (M), T-370647 (M), T-370650 (M), T-370656 (M), T-370657 (M), and T-370658 (M) in Barangay San Vicente, Sta. Maria, Bulacan from ASAMA REALTY DEVELOPMENT CORPORATION for the purpose of developing said properties for socialized housing. In reply, please be informed that Section 20 of Republic Act No. 7279 provides: "Section 20. Incentives for Private Sector Participating in Socialized Housing. To encourage greater private sector participation in socialized housing and further reduce 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: cSDIHT 1) Project-related income taxes; 2) Capital gains tax on raw lands use for the project; 3) Value-added tax for the project concerned; 4) Transfer tax for both raw and completed projects; and 5) Donor's tax for both lands certified by the local government units to have been donated for socialized housing purposes. xxx xxx xxx" The conveyance of the aforesaid properties covered by Transfer Certificate of Title Nos. T-370646 (M), T-370647 (M), T-370650 (M), T-370656 (M), T-370657 (M), and T-370658 (M) in favor of FREEDOM TO BUILD, INC. is exempt from the payment of capital gains tax. Upon issuance of this letter of exemption, and upon registration of the document of sale, a lien on the Certificates of Title of the lands to be issued in the name of FREEDOM TO BUILD, INC. 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 as a socialized housing project in accordance with the socialized housing development plan, duly approved by the Housing and Land Use Regulatory Board/Local Government Unit concerned. However, it is observed that the documentary stamp tax is not one of the taxes covered by the tax exemption clause in Section 20 of R.A. No. 7279. Such being the case, FREEDOM TO BUILD, INC. shall be liable to pay the documentary stamp tax on the documents conveying the aforementioned properties imposed under Section 196 of the Tax Code of 1997, based on the actual consideration thereof. 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