Samahang Nagkakaisa ng San Isidro Tarlac Homeowners Association, Inc. Phase II

December 17, 2009 BIR RULING [SH-(133) 793-09] 20 RA 7279; S20-111-2000 Samahang Nagkakaisa ng San Isidro Tarlac Homeowners Association, Inc. Phase II 4 San Isidro, Tarlac City Attention: Mr. Eduardo T. Quintero President Gentlemen : This refers to your letter dated November 24, 2009 requesting for a ruling that the sale of a parcel of land to the Community Mortgage Program (CMP) beneficiaries is exempt from the payment of capital gains tax, documentary stamp tax, and other related taxes. AaHTIE Documents submitted disclosed that the Samahang Nagkakaisa ng San Isidro Tarlac Homeowners Association, Inc. is a non-stock, non-profit organization duly registered with the Housing and Land Use Regulatory Board (HLURB); that it is an association of underprivileged and homeless citizens; and that TCT Nos. T-266846, T-209646 and T-209624 are the properties subject to the CMP pursuant to a certification issued by the National Home Mortgage Finance Corporation is actually part of a CMP project and shall be proportionately distributed to the association's qualified member-beneficiaries. In reply, please be informed that pursuant to Section 32 of R.A. No. 7279, pertinent portion of which reads: "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 landowner who sells his/her/its property for use in socialized housing project is exempt from the payment of capital gains tax and from the expanded withholding tax under Revenue Regulations No. 12-94, as amended by Revenue Regulations No. 2-98. Such being the case, the sales to the members of the Samahang Nagkakaisa ng San Isidro Tarlac Homeowners Association, Inc. of the real properties covered by TCT Nos. T-266846, T-209646 and T-209624 are exempt from the capital gains tax and the expanded withholding tax. Upon issuance of this letter of exemption, and upon registration of the documents of sale, a lien on each Certificates of Title to be issued in the name of the individual members of the Samahang Nagkakaisa ng San Isidro Tarlac Homeowners Association, Inc. shall be caused to be annotated by the Register of Deeds having jurisdiction over the properties, to the effect, that the sales of said properties are in accordance with the provisions of R.A. No. 7279. However, it is observed that the documentary stamp tax is not one of the taxes covered by the tax incentives/exemption clause under Sections 20 and 32 of R.A. 7279. Such being the case, the seller, Spouses Josefino Talavera and Ma. Teresita Rosales Santos, is liable to pay the documentary stamp taxes on the documents conveying the portions of their real properties to the members of the Samahang Nagkakaisa ng San Isidro Tarlac Homeowners Association, Inc. under Sec. 196 of the Tax Code of 1997, as amended. The documentary stamp tax shall be based on the consideration contracted to be paid or the fair market value of the realty determined in accordance with Section 6 (E) of the Tax Code of 1997, as amended whichever is higher. (BIR Ruling S-32-062-2000 dated May 10, 2000) DECSIT 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.) JAMES H. ROLDAN Assistant Commissioner Legal Service