BIR Ruling No. 547-2020

BUREAU OF INTERNAL REVENUE REPUBLICOF THE PHILIPPINES DEPARTMEAT OF FINANCE Quezon City

RA No.7279 BIR Ruling No. 034-15 CMP-0547-2020 3EP 2 3 2020

Sitio Lutaw-lutaw, Tisa, Cebu City HOMEOWNERS ASSOCIATION, INC. KATIPUNAN NEIGHBORHOOD

Attention : JOSE L.GALEOS President

Gentlemen:

Revenue Region No. 13, Cebu City, through 2nd Indorsement dated November 22, 2018, requesting exemption from capital gains tax (CGT), relative to the transfer of title of land from KATIPUNAN NEIGHBORHOOD HOMEOWNERS ASSOCIATION, INC., in favor of its qualified member beneficiaries pursuant to Republic Act No. 7279 otherwise known as the "Urban Development and Housing Act of 1992". This refers to your letter dated January 13, 2017, as indorsed by the Regional Director,

subdivided lots to their names. City; that the aforesaid lot was acquired through Self-help Socialized Housing Program of City Government of Cebu, involving Thirty Two (32) beneficiaries, under City Resolution No. beneficiaries; and that the member-beneficiaries are now in the process of transferring the purchased owner of the parcel of land located at Int. C. Salvador St., Labangon, Cebu City and covered by that on November 06, 2018, a Deed of Partition with Conveyance was executed by KATIPUNAN NEIGHBORHOOD HOMEOWNERS ASSOCIATION, INC. in favor of its member- Transfer Certificate of Title (TCT) No. ASSOCIATION, INC., with Taxpayer's Identification No. Itis representedthatKATIPUNANNEIGHBORHOODHOMEOWNERS issued by the Registry of Deeds of Cebu is the registered

payment of their purchased subdivided lot is not subject to either the CGT imposed under Section 27 (D) (5) of the Tax Code of 1997, as amended, or the creditable withholding tax imposed under actually bought the same from the former owner through the Association. In other words, the actually own the aforedescribed lots. HOMEOWNERS ASSOCIATION, INC. in favor of its member-beneficiaries who have made full Revenue Regulations No. 2-98, as amended, considering that the said transfer of property is made only as a formality to finally effect the transfer of the said property to its member-beneficiaries, who association is merely transferring the ownership of the property to its member-beneficiaries who In reply, please be informed that the transfer by KATIPUNAN NEIGHBORHOOD

the Tax Code of 1997, as amended, since there is no donative intent on the part of the Association to donate the said property to member-beneficiaries, considering that it could not donate property the ownership of which already belongs to the member-beneficiaries. (BIR Ruling No. 034-2015 dated February 5, 2015) Furthermore, the said transfer is not subject to the donor's tax imposed under Section 98 of

documents subject to the documentary stamp tax (DST) imposed therein are those where the realty It is noted that under Section 196 of the Tax Code of 1997, as amended, the deeds or

KATiPUNAN NEIGHBORHOOD HOMEOWNERS ASSOCIATIONINC Page 2 of 2 CMP-0547-2820 SEP 2 3 2020

any other person or persons designated by such purchaser or purchasers, thereby excluding from its sold shall be granted, assigned, transferred, or otherwise conveyed to a purchaser or purchasers or to purview the instant case considering that the supposed purchaser is actually the owner thereof.

acknowledgment to the deed of conveyance is subject to the documentary stamp tax of P30.00 not subject to DST under Section 196 of the Tax Code of 1997, as amended. However, the notarial Accordingly, the transfer of title of the subject lot in favor of the member-beneficiaries is

pursuant to Section 188 of the Tax Code of 1997, as amended by RA F0963 (TRAIN Law).

It is, however, understood that the Certificate Authorizing Registration (CAR) shall only be

established upon proper verification by the Revenue District Officer (RDO) concerned that, beneficiaries. (BIR Ruling No. 034-2015 dated February 5, 2015) considering the rules on valuation on real property, the actual selling price per sale transaction in this case does not exceed issued after the submission of the requirements provided under RMO 15-2003 and after it is for house and lot and for lot only for each qualified

upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered This ruling is being issued on the basis of the foregoing facts as represented. However, if

null and void

Very truly yours,

ae3aman

CAESAR R. DULAY

Commissioner of Internal Revenue

036757 K-1-JAC