BIR Ruling [UN-050-95]

February 3, 1995 BIR RULING [UN-050-95] Mr. Pablo N. Roco, Sr. #49 Kamagong Road, Mariano Village Bgy. Balagtas, Naga City S i r : This refers to your undated letter requesting for exemption from the payment of capital gains tax on the sale of your two (2) parcels of land in favor of the City Government of Naga, to be used in Socialized Housing Project pursuant to Section 20 of R. A. No. 7279, otherwise known as the Urban Development and Housing Act of 1992. cdtech Records disclosed that the two (2) parcels of raw land situated in Km. 4 Barangay San Felipe, Naga City covering an area of 3.7476 hectares, covered by Transfer Certificates, of Title Nos. 7279 and 13485 issued by the Registry of Deeds for Naga City are the subject of a Deed of Absolute Sale between the owner, Pablo N. Roco, Sr. and the City Government of Naga, represented by its City Mayor, Hon. Jesse M. Robredo; and that the said properties are intended for the furtherance of the Socialized Housing Project of the City of Naga. In reply, please be informed that pursuant to Section 20 of R. A. No. 7279, pertinent portion of which reads: "SEC. 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: xxx xxx xxx (2) Capital gains tax on raw lands used for the project; xxx xxx xxx" the landowner, Pablo N. Roco, Sr. is exempt from the payment capital gains tax on the conveyance of the aforesaid property covered by Transfer Certificate of Title Nos. 7279 and 13485 favor of the City Government of Naga. Upon application exemption, a lien on the titles of the land shall be annotated in the Register of Deeds, having jurisdiction over the properties to the effect, that the said properties is to be applied or is being applied to socialized housing project pursuant to R. A. 7279. Upon the sale of the socialized housing units (lot and house) or lots only, the City Government of Naga as owner, should be exempt from the project-related income taxes, and creditable expanded withholding tax prescribed under Revenue Regulations No. 1-90 as amended by Revenue Regulations No. 12-94. It shall be understood that to be tax-exempt, the selling price per lot of house and lot shall not exceed P150,000.00, in accordance with Revenue Regulations No. 9-93 implementing R. A. No. 7279. Moreover, it is observed that documentary stamp tax is one of the taxes covered by the tax exemption clause in Sec. 196 of R.A. 7279. Such being the case, the landowner shall be liable to pay the documentary stamp tax on the document conveying the property to the City of Naga imposed under Sec. 196 of the Tax Code , as amended, based on the actual consideration paid by the City to the landowner. 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. (BIR Rulings No. 393 dated October 1, 1993) Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service)