Amendment of Transitory Rules on Valuation of Real Property for Internal Revenue Tax Purposes

June 3, 1987 REVENUE AUDIT MEMORANDUM ORDER NO. 3-87 SUBJECT : Amendment of Transitory Rules on Valuation of Real Property for Internal Revenue Tax Purposes TO : All Internal Revenue Officers and Others Concerned Pending establishment of real property zonal values for internal revenue tax purposes, pursuant to the provisions of Section 16(l) of the National Internal Revenue Code, as amended by Presidential Decree No. 1994, and to achieve the objective of limiting discretion on valuation of realty without in the process unduly prejudicing the Government's interest, Paragraph 2 of Revenue Audit Memorandum Order No. 3-86 dated May 19, 1986, as amended by Revenue Audit Memorandum Order No. 3-86A dated June 10, 1986, and Revenue Audit Memorandum Order No. 2-87 dated May 12, 1987, is hereby further amended to read as follows: 2. Real property valuation during transitory period . Pending final determination of zonal values and as a short-run measure to establish a more realistic basis for real property valuation, the following internal revenue taxes shall be assessed either on the basis of the selling price of the real property as shown in the deed of sale or the fair market value thereof, whichever is the higher amount. The transitory valuation rules shall be as follows: (a) In general, the fair market value of the real property (land and/or improvement) per its latest tax declaration filed in the Provincial/City Assessor's Office, shall be increased by ten percent (10%) thereof, to cover inflationary value; (b) If the real property is located in a developed village/ subdivision within the jurisdiction of the Revenue Regional Office No. 4-B as appearing in the approved attached lists hereof, the same shall be increased by 50%. The listings of the developed subdivisions of Regional Offices other than Revenue Region No. 4-B, Quezon City, shall likewise be part of this Revenue Audit Memorandum Order upon their submission and subsequent approval by the Commissioner. (c) If the real property is classified in the tax declaration as a commercial or industrial property, the same shall be increased by fifty percent (50%), regardless of regional location; (d) If the real property is classified as a fishpond, the same shall be increased by fifty percent (50%), also regardless of regional location. 2.1 Income tax on capital and ordinary gains from real property transactions and documentary stamp tax on deeds of sale and conveyance of real property; 2.2 Estate tax; 2.3 Donor's tax; and 2.4 Other applicable taxes. When the Revenue District Officer concerned feels that the 10% or 50% increase is not valid or when the taxpayer does not agree to the 50% increase over the market value appearing in the latest tax declaration, the Certificate Authorizing Registration to be issued by the Revenue District Officer to the taxpayer shall be plainly marked "TENTATIVE FAIR MARKET VALUE FOR INTERNAL REVENUE TAX PURPOSES PENDING ESTABLISHMENT OF THE APPLICABLE ZONAL VALUE." Upon establishment of the zonal value applicable to the property in question, the assessment shall be revised accordingly. EFFECTIVITY . This Order shall take effect immediately. (SGD.) BIENVENIDO A. TAN, JR. Commissioner