Real Estate Taxation in the Philippines. In preparation for the Real Estate Brokers Exam covering local and national taxes related to real estate transactions.
Real Estate Taxation in the Philippines. In preparation for the Real Estate Brokers Exam covering local and national taxes related to real estate transactions.
Real Estate Taxation in the Philippines. In preparation for the Real Estate Brokers Exam covering local and national taxes related to real estate transactions.
An act amending the National Internal Revenue Code (NIRC), as amended and for other purposes.
Sec. 6 NIRC
Power of the Commissioner to make assessments and prescribe additional requirements for tax administration and enforcement. (E) Authority of the Commissioner to prescribe Real Property Values
- The Commissioner is hereby authorized to divide the Philippines into different zones or areas and shall, upon consultation with competent appraisers both from the private and public sectors, determine the fair market value of real properties located in each zone area. For purposes of computing any internal revenue tax, the value of the property shall be, whichever is the higher of:
(1) The fair market value as determined by the commissioner of internal revenue.
(2) The fair market value as shown in the schedule of values of the Provincial and Assessors. DEPT ORDERS EFFECTIVITY
Each will give their recommended values for every section zones of lots located in the city or municipality, using the Maps of Locations and Actual Inspection of the area.
The 1 st two (2) highest recommended values Add then total divided by 2 equals the final value.
PUBLIC HEARING
Forward report to the Asset Valuation Division Ass. Service, BIR, Manila for review and approval. Residential Land/ Building Principally devoted to habitation
Commercial Land/building principally devoted to commercial purposes and generally for the subject of profit
Industrial - Devoted principally to industry as capital
Agricultural Devoted principally to raising of crops such as rice, corn, sugarcane, tobacco, etc. or to pasturing, dairying, inland fishing, salt making and other agricultural uses including timberland and forest land.
General Purpose Raw land undeveloped and underdeveloped area which has potential for development into residential, commercials, industrial, institutional, etc. must be less than 5,000 square meters.
Vicinity Means an area, locality, neighborhood or district about, near, adjacent, proximate or contiguous to street being located.
RR Residential Regular CR Commercial Regular GL Government Land GP General Purpose APD Area for Priority Development RC Residential Condominium CC Commercial Condominium I Industrial X Institutional A Agricultural PS Parking Slot CL Cemetery Lot CODE CLASSIFICATION A1 RICELAND IRRIGATED A2 RICE LAND UNIRRIGATED A3 UPLAND A4 COCOLAND A5 CITRUS LAND A6 FISHPOND A7 SWAMP A8 NIPA LAND A9 COTTON LAND A10 COGON A11 ABACA LAND
CODE CLASSIFICATION A12 ORCHARD A13 PINEAPPLE LAND A14 BANANA LAND A15 PASTURE LAND A16 CORN LAND A17 SUGAR LAND A18 TOBACCO LAND A19 CACAO A20 LANZONES CODE CLASSIFICATION A21 DURIAN A22 RAMBUTAN A23 MANGO A24 MANGROVE A25 CAMOTE/CASSAVA A26 BAMBOO LAND A27 PEANUT LAND A28 SOY BEANS LAND A29 GRAPE VINEYARD A30 PEPPER LAND CODE CLASSIFICATION A31 MINERAL LAND A32 NON METALLIC MINERAL LAND A33 COAL DEPOSIT A34 AFRICAN OIL LAND A35 RUBBER LAND A36 FOREST LAND/TIMBER LAND A37 HORTICULTURAL LAND A38 SALT BEDS A39 SEA SHORE A40 RESORT CODE CLASSIFICATION A41 SANDY/STONY A42 PRAWN POND A43 SORGHUM A44 IPIL IPIL A45 KANGKONG A46 ZARATE A47 VEGETABLE LAND A48 COFFEE A49 MOUNTINOUS/HILLY AREAS A50 OTHER AGRICULTURAL LAND
* Agricultural/Raw land not less than 5,000 square meters 3rd REVISION STREET/ SUBDIVISION VICINITY CLASS BIR ASSESSOR APPRAISER/ FINAL REALTORS Barangay 56, Puntod Section 3 Don Julio Pacana Rd CR 8,000.00 4,730.00 7,000.00 7,500.00 RR 4,000.00 4,730.00 2,000.00 4,365.00 Escobido St. RR 2,000.00 1,270.00 1,600.00 1,750.00 All Others RR 1,500.00 1,270.00 1,000.00 1,385.00 I 10,000.00 4,730.00 10,000.00 10,000.00 Barangay 56, Puntod Section 4 Corrales Ext. CR 24,000.00 3,040.00 15,000.00 19,500.00 RR 19,200.00 3,040.00 12,000.00 15,600.00 J.Pacana St. CR 22,500.00 4,730.00 15,000.00 18,570.00 RR 18,000.00 4,730.00 12,000.00 15,000.00 Gaabucayan St. CR 18,000.00 4,730.00 12,000.00 15,000.00 RR 14,400.00 4,730.00 9,600.00 12,000.00 I 12,000.00 4,730.00 10,000.00 11,000.00 Guanco Subd. RR 4,800.00 1,270.00 1,000.00 3,035.00 All other streets CR 4,000.00 1,270.00 4,000.00 4,000.00 RR 1,500.00 1,270.00 500.00 1,385.00 3rd REVISION STREET/ SUBDIVISION VICINITY CLASS BIR ASSESSOR APPRAISER/ FINAL REALTORS Barangay 55, Puntod Section 5 Gaabucayan Ext CR 18,000.00 4,730.00 15,000.00 16,500.00 RR 14,400.00 4,730.00 12,000.00 13,200.00 Corrales Ext. CR 24,000.00 4,730.00 15,000.00 19,500.00 RR 19,000.00 4,730.00 12,000.00 15,500.00 All other Streets CR 5,000.00 3,040.00 5,000.00 5,000.00 RR 3,000.00 3,040.00 500.00 3,020.00 Lots along road to Agora CR 8,000.00 4,730.00 5,000.00 5,000.00 RR 5,000.00 4,730.00 5,000.00 5,000.00 STREET/SUBDIVISION VICINITY CLASSIFICATION 2006 1997 1994 3RD REVISION 2ND REV. 1ST REV. ZV/SQ.M. ZV/SQ.M. Barangay 54 Along Super Highway Section 1 CR 1,500.00 1,300.00 Along Burgos Ext. CR 745.00 850.00 M.Vega St CR 754.00 850.00 All Others Streets CR 445.00 390.00 Duncan Subd. Section 2 RR 350.00 300.00 Barangay 55 Section 1 NHA Puntod RR 500.00 All other Streets RR 100.00 80.00 Barangay 55 Section 2 Cabaraban Subd. RR 1,150.00 580.00 J.Pacana St. CR 1,320.00 1,150.00 All other Streets RR 410.00 350.00 Barangay 55 Section 3 Don Julio Pacana Rd. CR 1,375.00 1,200.00 Escobido St RR 750.00 850.00 All other Streets I 1,030.00 900.00 STREET/SUBDIVISION VICINITY CLASSIFICATION 2006 1997 1994 3RD REVISION 2ND REV. 1ST REV. ZV/SQ.M. ZV/SQ.M. Barangay 55 Section 4 Corrales Ext CR 1,320.00 1,150.00 J.Pacana St. CR 1,700.00 1,500.00 Gaabucayan St RR 1,450.00 1,250.00 Guanco Subd. RR 900.00 All other Streets 650.00 550.00 Barangay 55 Section 5 Gaabucayan Ext CR 845.00 550.00 Corrales Ext CR 1,300.00 1,150.00 All other Streets RR 475.00 440.00 STREET/SUBDIVISION VICINITY CLASSIFICATION 2006 1997 1994 3RD REVISION 2ND REV. 1ST REV. ZV/SQ.M. ZV/SQ.M. Barangay 55 Section 6 Corrales Ext I 1,450.00 1,250.00 Gasoline Depot AR Mendoza Ext. RR 410.00 350.00 All other Streets RR 185.00 150.00 Barangay 55 Section 7 All other Streets RR 125.00 100.00 Barangay 55 Section 1 J. Pacana St. Macabalan CR 900.00 600.00 All other Streets RR RR 420.00 350.00 IMPOSED UPON ALL PERSONS Natural or Judicial, Whether Resident or Non Resident, including estates and trusts who: Sell Exchange or Dispose of Real Property located in the Philippines classified as CAPITAL ASSET
The term SALE includes:
Pacto de Retro Sales and Other forms of Conditional Sales
TAX BASE IS THE HIGHER OF: Gross Selling Price Fair Market Value as indicated in the latest Tax Declaration, or Zonal Value as determined by the CIR. CAPITAL ASSETS Means property held by the taxpayer (whether or not connected with his trade or business) but does not include:
Stocks in trade of the tax payer, or Other property of a kind which would properly be included in the inventory of the tax payer if on hand at the close of the taxable year Property held by the tax payer for sale to customers in the ordinary course of his trade or business or
Property used in the trade or business of a character which is subject to depreciation, or
Real Property used inn trade or business of the taxpayer.
The Transaction maybe taxable at the rate of 6% or exempt PRINCIPAL RESIDENCE Exempt from Capital Gain Tax provided:
Sale of Principal Residence is made by Natural person
The proceeds is fully utilized in acquiring or constructing a new principal residence with 18 months calendar months from the date of sale
CIR is duly notified within 30 days by the taxpayer from the date of sale thru a prescribed return (FORM 1706) and SWORN DELCLARATION OF INTENT. Said tax exemption can be availed of only once in 10 years. (Effective November 2000)
No full utilization of the proceeds of the sale that portion of the gain presumed to have been realized from the sale or disposition shall be subject to capital gain tax.
GSP/FMV (AT TIME OF SALE WHICHEVER IS HIGHER)x UNUTILIZED AMOUNT = TAXABLE PORTION GSP PRINCIPAL RESIDENCE Shall refer to the dwelling house, including the land on which it is situated, where the husband and wife or an unmarried individual, whether or not qualified as head of family, and member of his family reside. Actual occupancy of such principal residence shall not be considered interrupted or abandoned by reason of the individuals temporary absence there from due to travel or studies or work abroad or such other similar circumstances. Such Principal Residence must be characterized by permanency in that it must be the dwelling house in which, whenever absent, the said individual intends to return. PROOF: Certification from the Brgy. Captain Residential Address shown in the latest ITR Certification by Bldg. Administrator In Case condominium unit. Form 1706 shall be filed in triplicate by the seller with the AAB or the CA of the RDO having jurisdiction over the place where the property is located.
Filed within 30 days following each sales, exchange or disposition of real property.
One return shall be filed for every real property sold, exchanged or disposed (for cash sale or foreclosure sale) or every installment sales.
Pay as you file
Capital Gain Tax Final Tax, Gross Sales of seller is no longer included in his/her gross income for income tax purposes. 1979-1985
TAX BASE SELLING PRICE LESS COST OF SALES/EXPENSES = NET GAIN 100,000.00 10% OVER - 20%
1986 1990
TAX BASE SELLING PRICE OR FAIR MARKET VALUE WHICHEVER IS HIGHER x 5% = CAPITAL GAIN TAX
NO GAIN TAX/TAX ON GROSS SALE
SP-P 500,000.00 FMV 300,000.00
Effective 12/15/90 Zonal value took effect
TAX BASE SELLING PRICE, OR FAIR MARKET VALUE OR ZONAL VALUE WHICHEVER IS HIGHER x 5% = CGT
Jan. 1, 1998 COMPREHENSIVE TAX REFORM ACT/RA 8424
SAME BASE BUT RATE OF TAX IS 6%
1979 -1985 ACTUAL OVER/UNDER SP 500,000 500,000 COST 100,000 100,000 EXPENSES 50,000 200,000 TOTAL DEDUCTION 150,000 300,000 NET GAIN 150,000 200,000 CGT 100,000@10% 10,000 10,000 250,000@20% 50,000 100,000@20% 20,000 TOTAL TAX 60,000 30,000 1986 -1990 ACTUAL OVER/UNDER SP 500,000 300,000 FMV 300,000 300,000 TAX BASE 500,000 300,000 5% 5% TOTAL TAX 25,000 15,000 January 1, 1991 SP, FMV, ZONAL VALUE SP 500,000 300,000 FMV 300,000 300,000 ZONAL VALUE 400,000 400,000 TAX BASE 500,000 400,000 5% 5% 25,000 20,000 January 1, 1998
SP, FMV, ZONAL VALUE Whichever is higher rate is 6% Q. An 800 square meter lot with a house, was sold for P3.5M. Per tax declaration, the FMV of the house is P1.5M and the lot is P1.6 M. The zonal value of the lot is P3,500/sq.m. The sale is subject to capital gains tax.
Compute: 1. The Tax Base 2. The Capital Gain Tax 3. The Documentary Stamps Tax ANSWER: (1) Price per Deed of Sale P3.50M Zonal Value: Lot(800sq.m. @ P3.500/sq.m.) P2.80M Add: Lot improvement value whichever is higher (P3.50M-P2.80) (P0.70M) Improvement value per tax declaration P1.50M 1.50 M Total Zonal Value of the Property P4.30M
(1) Basis of the Capital Gain Tax is P4.30M because it is higher than the contract price.
(2) Capital Gain Tax: 6% of P4.30M P258,000 ====== (3) Documentary Stamps: 1.5%of P4.30M P 64,500 ====== Peter sold his residential house and lot located at Capistrano St, Cagayan de Oro City on July01, 2006 for P1M. Area of the lot is 200 sq. meters and the zonal value is P 4,000.00 per sq. meter. City Assessors fair market value for lot is P500,000.00 and for building is P400,000.00. Brokers commission is 5% of selling price. Compute the Tax Base, CGT, DST, and Commission of the broker. SOLUTION: 1. TAX BASE: Selling Price P1,000.000 Zonal Value Lot 200 sq.m. x P4,000.00 P800,000 FMV Lot 500,000 FMV Building 400,000 ZONAL VALUE OF LOT(HIGHER) 800,000 VALUE OF BUILDING 200,000 LOT(WHICHEVER IS HIGHER) P 800,000 BUILDING(WHICHEVER IS HIGHER) 400,000 TAX BASE P1,200,000
2. CAPITAL GAIN TAX: P1,200,000 x 6% P72,000
3. DOCUMENTARY STAMPS TAX: P1,200,00 x 1.5% P18,000
4. BROKERS COMMISSION: P1,000,000 x 5% P50,000
Arvin got Nick as his broker to sell his house and lot located at Puntod, Cagayan de Oro City for P1M offering Nick a 5% commission of the SP, but Nick requested Arvin that he will overprice the sale for P1.2M and he will assume the CGT and DST. Arvin approved the request happy to receive a net of P1M having no problem for taxes and commission. Nick the broker is happily computing his net commission after deducting 6% CGT and 1.5% DST based on SP or a total of P75,000 and a net of P125,000 instead of P50,000 If he chose the 5% commission. But nick forgot to take into consideration the BIR zonal value of the lot. When Nick went to BIR office to process the papers for transfer, this is the computation of the BIR Examiner. SOLUTION: SELLING PRICE P1,000,000 ZONAL VALUE OF LOT P2,000,000 2,000,000 FMV OF LOT 1,000,000 FMV OF BUILDING 500,000 500,000 TAX BASE 2,500,000 CGT 6% OF P2.5M 150,000 DST 1.5% OF P2.5M 37,000 TOTAL TAX DUE 187,000
NET COMMISSION P 12,500* TOTAL OVER PRICE P 200,000
*IF 5% COMMISSION OF P1M P 50,000
50,000 -12,500* 37,500 ORDINARY ASSETS -BIR FORM 1606
TAXABLE BASSE IS HIGHER OF :
The consideration stated in the sales document, or The fair Market Value indicated in the latest tax declaration or The zonal value as determined by the CIR In an exchange, the fair market value of the property received in exchange, as determined in the Income Tax Regulations shall be used.
TRANSACTION TAX RATE Registered with and certified by the HLRUB or HUDCC as engaged in socialized housing projects pursuant to RA 7279 the selling price of the house and lot or lot only does not exceed P300,000 0%
TRANSACTION TAX RATE Not registered with the HLURB, seller habitually engaged in real estate business:
with a selling price of Five hundred thousand pesos (P500,000.00) or less 1.5%
with a selling price of more than five hundred thousand pesos (P500,000) but not more than two million pesos (2,000,000.00) 3.0%
with a selling price of more than two million pesos (2,000,000.00) 5.0% TRANSACTION TAX RATE
A seller/transferor must show proof registration with HLURB or HUDCC to be considered as habitually engaged in the real estate business:
Seller not habitually engaged in the real estate business 6.0%
TREATMENT:
IF THE BUYER IS NOT ENGAGED IN TRADE OR BUSINESS No withholding is required to be made on the periodic installment payments
Applicable rate of tax based on the gross selling price or fair market value of the property at the time of the execution of the contract to sell, whichever is higher, shall be withheld on the last installment. IF THE BUYER IS ENGAGED IN BUSINESS Tax shall be deducted and withheld by the buyer from every installment based on the ratio: Actual Collection Agreed upon consideration ( Contract to sell) x GSP or FMV, whichever is higher, who shall file
BIR form 1606 shall be filed in triplicate by every withholding agent/buyer on the:
1. Sale 2. Transfer or 3. Exchange of Real Property WHEN AND WHERE TO FILE
File on or before the 10 th day of the ff. month
Filed with any AAB or CA of the RDO having jurisdiction over the place where the real property is located
Pay as you file ATTACHMENTS REQUIRED
Notarized Deed of Sale or exchange Photocopy of the title Certified true copy of the latest tax declaration (lot and/improvement) Lot only certification from Assessors Office that there is no existing improvement on the lot being transferred Proof of registration with HLURB or HUDCC, if applicable Proof of tax payment Tin of buyer and seller Proof of registration with HLURB or HUDCC, if applicable Proof of tax payment Tin of buyer and seller
These requirements must be submitted to the revenue officer of the ONETT counter of the RDO before a certificate authorizing registration (CAR) can be released to the taxpayer DOCUMENTARY STAMP TAX
On Deed of Sale and Conveyances of Real Property: P15/P1,000
BIR Form 2000 shall be: Filed within 5 days after the close of the month when the taxable document is made, signed, issued, accepted or transferred
Filed with the AAB or the CA of the RDO which has jurisdiction over the residence or place of business of the taxpayer
Pay as you file
Whenever one party to the taxable document enjoys exemption from DST, the other party who is not exempted shall be one directly liable for the tax.
ESTATE TAX BIR FORM 1801
Filed by the executor or administrator, or any of the legal age heirs of the decedent whether resident or non resident of the Phils., under any of the ff situations:
In all cases of the transfers subject to estate tax or
Where though exempt from estate tax, the gross value of the estate exceeds P200,000 or
Regardless of the gross value of the estate, where the said estate consists of registrable properties like real props, vehicles, shares of stocks or other similar property for which a clearance from the BIR is required as a condition for transfer of ownership. WHEN AND WHERE TO FILE
Filed within six (6) months from decedents death; in meritorious cases, filing be extended by 30 days
Pay as you file
Pay to the AAB or the CA of the RDO which has jurisdiction over the place of Domicile of the decedent
If decedent has no legal residence in the Phils, file in CIRs office
File only once
TAX BASE AND RATE
Schedule rate on the value of the net estate of decedent determined as of the time of death of decedent composed of all properties, real or personal, tangible or intangible, located in and out of the Phils.
In case of properties, the estate shall be appraised at its fair market value as of the time of death (higher of the FMV as indicated in the tax declaration or the zonal value as determined by the CIR). ATTACHMENTS
CTC of Death Certificate Notice of death duly received by the BIR if gross estate exceeds P20,000 (2 months) Any of the ff: 1. Affidavit of self adjudication 2. Deed of Extra Judicial Settlement of the estate 3. Court Order, if judicially settled 4. Sworn declaration of all properties of the estate
CTC of titles CTC of Tax Declarations Certificate of No Improvements From Assessors Office Certificate of Deposit CR of vehicles Certificate of Shares of stocks and proof of its valuation CPA statement as to the itemized assets, deductions from the estate and the taxable with the estate tax due
Certificate from Brgy. Captain as to claimed family home Duly notarized promissory note to support Claims vs. Estate Proof of Transfers for public use, Prop. Previously taxed Accounting of the proceeds of loan contracted within 3 years prior to the death of decedent Official receipts to support funeral expenses, medical expenses. COMPUTATION OF THE TAX Gross Estate( Including family home, AR, Value of property mortgaged)
P5,000,000 Less: Deductions from gross estate 1. Expenses, losses, indebtedness, taxes a. Actual funeral expenses or P300,000 5% of gross estate 250,000 (Whichever is lower)but not to exceed 200,000 b. Judicial expenses of testamentary or intestate proceedings
20,000 c. Claims vs. Estate Loan must be duly notarized and if loan contracted within 3 years before death, show disposition of loan
P1,000,000
d. Claims vs. insolvent persons(AR must be included in GE)
50,000
e. Unpaid mortgages
200,000
f. Income tax Payable
5,000
g. Property tax Payable
5,000
h. Losses on acct of fires, storms, etc.
20,000
i. Losses due to theft, robbery
10,000 2. Transfer for public use RP, LGU, EXCL, Public Use 3. Bequests, devices, or transfers to DSWD, Cultural or charitable institutions
10,000 4. Vanishing Deduction(Property previously taxed) 5 years 5. Family home(certified to by Brgy. Capt., not to exceed P1M if conjugal 50% deducted)
500,000 6. Medical expenses incurred within 1 year prior to death, supported by receipts
500,000 7. Standard Deduction 1,000,000 Total deductions 3, 570,000 Net Estate 1,430,000 Less: Net Share of SS = 1,430,000/2
715,000 Taxable Net Estate P 715,000 Estate Tax due: 32,200 P200,000 - Exempt 200k 500k 5% of Excess over 200k 500k 2M 15k 8% of Excess over 500k Sales P500,000 Purchases 300,000 Output Tax 12% x 500,000 60,000 Input Tax 12% x 300,000 36,000 Input Tax Carried over previous qtr. 10,000
Output Tax 60,000 Less: Input Tax fr. Previous qtr 10,000 Input Tax 36,000 Total Input Tax 46,000 Vat Due and Payable P14,000
COMPUTATION OF EVAT/COMMISSION/EWT Buyer's Name TCP EVAT NTCP RATE GROSS COMM. EWT NET COMM. Ma. Cristy P1,200,000 P128,571.43 P1,071,428.58 3% P32,142.86 P3,214.29 P28,928.57 Legend: TCP - Total Contract Price EVAT - Expanded Value Added Tax NTCP - Net Total Contract Price EWT - Expanded Withholding Tax
Formula: TCP -------------- = NTCP x12% = EVAT 112% 1,200,000 -------------- = P1,071,428.57x12% = P128,571.43 1.12 As Licensed Broker or Salesman, you should also know your own tax obligation and compliance with the BIR, not only with DTI, HLURB and the local government.
Register you realty business with the BIR.
Keep books of accounts for your transactions and register with BIR. Keep Official Receipts and register with BIR File your return and pay tax with the BIR Return Registered Non - VAT Registered Vat(*) Monthly Quarterly Annual
Percentage Tax Income Tax Final ITR VAT VAT/ Income Tax Final ITR
(*) Gross Receipts of P1.5M in any 12 months or calendar year.
It is not enough you were withheld a tax. Tax withheld is not a final tax. Tax withheld is creditable and deductible from your VAT or income tax due.
Withholding agents are regularly submitting reports to the BIR. Names, recipients of commissions and amount received are indicated in the report. As recipients of commissions, report your receipts in your income tax return. Personal Exemptions:
Married - 50,000 Head of the Family - 50,000 Single - 50,000
Additional Exemptions:
Dependent Children - 25,000 each (4) Q. Peter sold to Mikko (both naturalized Filipino citizens) in June 2010, a residential lot for P960,000, exclusive of mortgage to be assumed by Mikko amounting to P100,000. Mikko gave a down payment of P160,000. Both agreed that the balance will be paid in eight(8) equal monthly installments beginning July 2010. Peter realized a profit of Twenty five percent (25%) of cost.
Compute the following:
1. Selling Price 4. Gross Profit 2. Contract Price 5. GP for tax purposes 3. Initial Payment made 6. Taxable Income (2010 -2011) 1. SELLING PRICE Cash payment to the seller P 960,000 Add: Assumed Mortgage 100,000 Selling Price P1,060,000 =======
3. INITIAL PAYMENT MADE Down Payment P 160,000 Installments (P100,000 x 6 mos. For July-Dec) 600,000 Initial Payment for Taxable Year P 760,000 =======
6. TAXABLE INCOME FOR 2010 AND 2011 For 2010: P760,000x22.08% P 167,808 ======= For 2011: P 200,000x22.08% P 44,160 ======= Q. A 5 year old residential house with a floor area of 350 square meters was sold by Real Estate Broker Gonzales Realty and its salesman, Pete for a total contract price of P5.0M. The Market Value of the land per tax declaration is P1.0M; however the BIR zonal valuation has a rate of P2,500/sq. meter. The declared market value of the residential building is P3.0M.
Compute the following: 1. Capital Gain Tax Due 2. Documentary Stamps 3. Transfer Fee
1. THE CAPITAL GAIN TAX DUE AND PAYABLE Total Consideration P5,000.000 BIR zonal value: Land (1,000 sq.m. @P2,500) 2,500,000 Add Building value: a. Contract Price less Lot Zonal Value P5.0M P2.5M=P2.50M b. Tax declaration market value P3.0M whichever is higher(BV) 3,000,000 Adjusted value of the property P5,500,000
Capital Gain Tax: 6% of P5.50M = P330,000 ====== 2. Documentary Stamps: 1.5% of P5.50M =P 82,500 ====== 3. Transfer Tax: of 1% x P5.50M = P 27,500 ====== Q. Compute for the Capital Gain Tax, in a sale of a condominium unit with the following information gathered:
Value per Deed of Sale - P3.0M Zonal value of condominium unit - P22,500/sq.m. Market value of condominium unit - P1.50M Assessors value of land where the condominium is built - P2,500/sq.m. Zonal value of land where condominium project is built - P5,000/sq.m. Floor area of the condominium unit sold - P150 sq.m.
Capital Gain Tax {6% of P3.375M(150 sq.m.@P22,500)}
= P202,500 ====== Q. Arvin offered to sell to Gee his land located at RER Subd., Cagayan de Oro City at a price of P1.5M. Gee is interested of the property but instead of offering to buy, she offered to swap/exchange it with another property, a house and lot located in Carmen, in the same city with a land area of 300 sq.m. valued at P2,500/sq. m. and an old house with a market value per tax declaration of P900,000. Arvin agreed to Gees offer and told the latter that both of them would not have to pay the capital Gain Tax; however, Gee objected since there was no money involved in the transaction. a. Is Gee correct in objecting the payment of Capital Gain Tax? b. If Gee is wrong, who should pay the Capital Gain Tax and how much? a. No, Gee is not correct because exchange of real between two individuals is subject to gains tax. b. Both Arvin and Gee shall pay capital gains tax on their respective properties computed, as follows:
Arvin: 6% of P 1.5M P 90,000 ========
Gee: Land (300sq.m. @ P2,500 P 750,000 Per Market Value House: 900,000 Tax Base of capital gain tax P 1,650,000
Tax : 6% of P1.650M P 93,000 ========
Q. Trifie, a licensed real state broker obtained this net listing: an industrial lot for sale of P6.0 M. She therefore had to sell the property at a price that would be inclusive of the capital gain tax, the documentary stamps and the brokers commissions of 5%.
Compute the following : (1)The gross Selling Price (2) The capital gains tax to be paid (3) The documentary stamps to be paid (4) The gross commission to be shared by the brokers. (1) Gross Selling Price: P6.0 M/87.5% (100 12.5%) P6,857,142.86 ========== (2) Capital Gains Tax: 6% of P6,857,142.86 P 411,428.57 ========== (3) Documentary Stamps Tax: 1.5% of P6,857,142.86 P 102,857.14 ========== (4) Brokers commission: 5% of P6,857,142.86 P 342,857.14 ==========