Real Estate Taxation
sale which requires full payment of the capital gains tax before the sale can be
The lease of house and lot with a rental of 100,000 php per month, which is the sole
income of the owner shall be subjected to PERCENTAGE TAX
The annual registration fee for a VAT-registered real estate broker is P500.00
Unless validated, tax credit life span is only for 5 years
A tax in the sale of real property classified as capital asset is a FINAL WITHHOLDING
TAX
In a foreclosure sale, the creditor bank is the STATUTORY SELLER and as such is
liable to pay the capital gains tax based on the bid price.
TAXATION is the inherent power of the State acting through the legislature, to
impose and collect revenue for the purpose of supporting the government and its
recognized objectives.
A real estate dealer/ lessor whose annual gross receipts do not exceed P1,919,500
shall be liable as NON-VAT taxpayer subject to PERCENTAGE TAX under section 112
(NOW Sec 116 of the Tax Reform Act of1997) on the Internal revenue code
Lease of real property for residential use in the ordinary course of business is
subject to value added tax when the annual gross receipt is MORE THAN P1,
919,500 and the monthly rental per unit exceeds P12,800
The lease of residential units with a monthly rental per unit not exceeding P12, 800
is exempt from VAT regardless of the aggregate rentals during the taxable year
Capital Gains Tax of six percent (6%) shall be based on TAX BASE and shall be paid
on NOT LATER THAN 30 DAYS AFTER NOTARIZATION. Payment after the said period
is subject 25% penalty.
CAPITAL GAINS TAX is the tax imposed in lieu of the income tax on the profits
presumed to have been realized in the sale, exchange or disposition of real property
classified as a capital asset by an individual, estate or trust.
ZONAL valuation is used by the BIR as the basis for computing the capital gains tax
or expanded withholding tax other than the actual selling price
A standard deduction of 1,000,000 , in addition to deduction for family home with
fair market value not exceeding P1,000,000 is allowed as an additional standard
deduction from gross estate for estate tax purpose beginning January 1, 1998
Under the revenue memorandum circular no. 1-98, a corporation is nowsubject to
capital gains tax if it sold real estate classified as CAPITAL ASSET
Under RMO No. 1-98, an individual can now be exempted in paying capital gains tax
if the proceeds of the sale shall be fully utilized in acquiring or constructing a new
principal residence within 18 months
Based on net gifts, the maximum of donors tax is 15%
In payment of estate tax, an allowed deduction to the gross estate of a decedent is
funeral expense which is 5% of gross estate or P200,000 whichever is lower
The Estate Tax Returns shall be filed with the BIR within 6 MONTHS
The amount of family home equivalent to fair market value considered as allowable
deduction from the estate of a decedent is P1, 000,000
An enforced proportionate contribution imposed upon a person, property or
interest by the legislature for a public purpose and generally payable is called TAX
A tax affixed on documents, instruments and papers, evidencing the acceptance,
assignment or sale of a right, property or obligation is called DOCUMENTARY STAMP
TAX
For purposes of determining whether a seller/tranfereror can be considered as a
habitually engaged in real estate business, he should offer satisfactory evidence that
he consummated at least SIX taxable real estate transactions during the preceding
year
Sale of real property with MORE THAN 25% down payment is considered as a cash
registered
When a done of a parcel of land is a stranger, the donors tax rate is 30%
The sale and transfer from a real estate dealer to a buyer of a house and lot at P4,
000,000 is exempt from CAPITAL GAINS TAX
The transfer tax in the sale of real estate properties is paid at the TREASURER OF
THE LGU WHERE THE PROPERTY IS LOCATED
A banks acquired asset which form part of its real estate inventories at the close of
its accounting period shall be classified as ORDINARY ASSET
The documentary stamp on lease of real estate is P3.00 for the first P2, 000 or
fraction thereof and additional P1.00 for every 1,000 in excess for the first P2, 000
The documentary stamp on every mortgage or pledge of real estate is P20.00 for
the first P5, 000 plus P10.00 for every P5, 000 or fraction thereof in excess of the
first P5, 0000
In case of sale of a real property paid under deferred payment basis, the payment of
the document stamp tax shall accrue upon EXECUTION OF THE DEED OF ABSOLUTE
SALE
The creditable withholding tax in the sale of a real estate dealer worth, P1.5 Million
is 3%
To avail of exemption from capital gains in sale of a family home, the seller is
required, among others, to notify the BIR through a prescribed form of his intention
to avail of the exemption. The notice must be filed within 30 DAYS from the date of
sale
After a deed of absolute sale was made, signed and notarized the Documentary
Stamp Tax on real property will be paid WITHIN 5 DAYS OF THE NEXT MONTH
Capital gains tax on the sale of real estate classified as capita asset is PREPAID
INCOME TAX
If the property sold is an ordinary asset, the applicable tax is CREDITABLE
WITHHOLDING TAX
In case a false or fraudulent Estate, Donor or Capital Gains Tax BIR form willfully
made the surcharge based on the taxes or deficiency shall be 50%
The sale of real property worth P1.5 Million considered as ordinary asset by a
person who is not habitually engaged in real estate business shall be subject to a
creditable withholding tax rate of 6%
Real estate brokers with an aggregate income of P1, 919,500 or more within 12
month period are required to register as VAT taxpayers
The exemption payment of CGT on the sale of principal residence may be availed
only once every 5 YEARS
Spouse A and B sold their principal residence and as their broker, you should advise
them that the transaction is exempt from Capital Gains Tax if they spend 100% of
the proceeds of the sale in acquiring the new principal residence
The W/H tax of a broker becomes 15% when his accumulated income for the year is
more than P720, 000
PROPERTY TAXATION
An annual levy on real property equivalent to one present of the assessed value
which shall be in addition to the basic real estate tax is called SPECIAL EDUCATION
FUND
Under the Local Government Code, agricultural lands of more than one hectare are
subject to the additional 5% tax on idle land when at least ONE HALF OF THE ARE IS
UNCULTIVATED

Pursuant to local the local government code, the next period for property owners to
submit a sword declaration of ownership and value with assessor is NOT LATER
THAN JUNE 30, 2013

For taxation purposes, real estate properties shall be assessed on the basis of
ACTUAL USE regardless of where it is located or whatever uses it

Within 60 DAYS from the date of acquisition, the buyer of a property is required to
file a sworn declaration of ownership and value pursuant to the Local Government
Code

A special kind of valuation which is referred to as the percentage of market value of

land and improvement subject to the taxes levied by the state is called the
ASSESSED VALUE

Under the Local Government Code, agricultural lands more than one hectare are
subject to the additional tax on idle land not exceeding 5% when the entire are is
uncultivated

In case a property owner does not agree with the notice of assessment by the
Assessor, he may file an appeal with the LOCAL BOARD OF ASSESMENT APPEAL

A taxpayer has 1 YEAR to redeem his real property which was levied and
subsequently forfeited and acquired by the local government unit due to tax
delinquency

A real property auctioned by a local government unit in order to satisfy tax

delinquency of its owner may be redeemed, provided that, among others, the
expenses of the sale, plus interest of not more than 2% PER MONTH on the
purchase price from the date of the sale to the date of redemption shall be paid

The rate of real estate tax in municipalities within Metro Manila is not more than
2% of assessed value

The composition of the Board of Assessment Appeals in the City of Makati is

Register of Deeds, City Prosecutor, and City Engineer, No City Assessor

In addition to the basic real property tax, a province may levy an annual tax on an
agricultural land planted to perennial crops with less than 50 tress to a hectare at
the rate of not exceeding 5% of the assessed value of the property

Unpaid real property tax is subject to 2% per month interest, up to a maximum

period of 36 MONTHS

November 06 Special education tax is an annual levy on real estate equivalent to 1%

of assessed values which shall be in addition to the basic real estate tax

Appeals from notice of assessment by the assessor may be field with the LOCAL
BOARD OF ASSESSMENT APPEALS

Real estate tax is arrived at by multiplying the rate of tax by ASSESSED VALUE

MARKET VALUE is the value place on taxable property by the assessor for ad-
valorem tax purpose

As provided for by the local government code, the assessment level of residential
land is NO MORE THAN 20% of its fair market value

Within SIXTY (60) DAYS from the date of acquisition, the buyer of a property is
required to file a sworn declaration of ownership and value pursuant to the Local
Government Code

The chairman of the Local Board of Assessment Appeal in the City is the REGISTER
OF DEEDS

The transfer tax in the sale of real estate properties is paid at the TREASURERS
OFFICE OF THE LGU