Sworn Declaration, in Lieu of Capital Gains Tax Return, in Connection with Sale, Exchange or Other Disposition of Real Property Made by an Individual, Estate or Trust

December 22, 1986 REVENUE MEMORANDUM CIRCULAR NO. 50-86 SUBJECT : Sworn Declaration, in Lieu of Capital Gains Tax Return, in Connection with Sale, Exchange or Other Disposition of Real Property Made by an Individual, Estate or Trust TO : All Revenue Regional Directors, Revenue District Officers, and Others Concerned 1. Background . Batas Pambansa Blg. 37, as amended, as implemented by Revenue Regulations No. 8-79, as amended by Revenue Regulations No. 13-85, requires that if the sale, exchange or disposition of real property is made by an individual, estate or trust but the said person, as vendor/transferor, is under the law not required to pay the capital gains tax either because "(i) The real property sold is used in the seller's trade or business, (ii) The real property was held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business (e.g., the seller is engaged in the business of buying and selling real property), (iii) The real property was offered for rent" (Sec. 7(a)(4), REV. REGS. NO. 13-85), in lieu of the capital gains tax return, such vendor/transferor shall file with the Revenue District Office concerned a Sworn Declaration of the reason for exemption from payment of the capital gains tax which shall constitute as a valid application for the issuance by the Revenue District Officer of the required certification authorizing transfer of title to the real property sold, exchanged or otherwise disposed. cd i 2. Mode of procedure . The vendor/transferor of the real property shall attest in his sworn declaration either of the following: 2.1 If the real property sold was used in his trade or business (a) the fact that said property had been used in his trade or business; (b) the nature of its use, e.g., as his place of establishment; (c) the nature of the vendor's business; and (d) his current privilege tax receipt (PTR) showing the official receipt number, date and amount paid. 2.2 If the real property sold was held primarily for sale in the course of his trade or business (a) the fact that is a real estate dealer; and (b) his current privilege tax receipt (PTR) showing the official receipt number, date and amount paid. 2.3 If the real property sold was held primarily for rent (a) the fact that he is a real estate dealer; and (b) his current privilege tax receipt (PTR) showing the official receipt number, date and amount paid. 3. Evaluation of the sworn declaration . The Revenue District Officer concerned shall evaluate the affiant's sworn declaration and shall require the said affiant to present the following for evaluation as a pre-requisite for issuance of the BIR clearance for transfer of title to the real property sold/disposed: acd 3.1 The official receipt evidencing payment of the said affiant's privilege tax (PTR) referred to under paragraph 2 hereof; and 3.2 The official receipt or commercial invoice issued by the affiant to the vendee in connection with payment received. 4. Effectivity . The foregoing requirements shall take effect beginning January 1, 1987. (SGD.) BIENVENIDO A. TAN, JR. Commissioner