2015 BIR Rulings

 

Permanent structures were built on a property which belonged to another. Both parties executed an agreement, without monetary consideration, to exchange their respective properties and consequently asked for exemption from CGT and DST imposed by Sections 24 (D) and 196 of the Tax Code, as amended.

 

According to Section 2 and 108 of Presidential Decree 1529, the Regional Trial Court has authority to act on all petitions filed after the original registration of title. Thus, any change or amendment on the land titles or in the ownership of such properties should be done by seeking judicial relief. Absent such determination, exemption from CGT and DST cannot be granted.

February 3, 2015 

038-2015

The sale of the old principal residence occurred after the new principal residence was acquired. The sale of the old principal residence must have preceded the acquisition of a new principal residence for the exemption from Capital Gains Tax to apply. Furthermore, it is required under RR 2-98 that the amount representing the 6% CGT must be deposited under an Escrow Agreement between the concerned Revenue District Officer, the Seller and the Transferee, and the Authorized agent bank. Release occurs if the proceeds of the sale has in fact been utilized in the acquisition or construction of the Seller/Transferor’s new principal residence within 18 calendar months from date of the said sale or disposition.

February 9, 2015

051-2015

A trust account was absorbed by two banks. The trust account was used by the banks to acquire real estate properties. The trust account was closed and the real estate properties were re-conveyed to the Trustors.

 

In this case there is no real transfer of ownership since the Trustee acquired the property by virtue of a Trust Agreement which the Trustee re-conveyed the property to the Trustor will not be treated as another transfer separate and distinct from the sale between the original owner and the Trustee. The conveyance is treated as a continuation and confirmation of title in favor of the ultimate and real beneficiary of the subject properties. Therefore they are not liable for Capital Gains Tax and Creditable withholding tax. Neither is such a re-conveyance subject to VAT, Gift Tax, and Documentary Stamp Tax.

February 24, 2015

130-2015

In 2007, the Regional Trial Court of Makati ordered the cancellation of a Transfer Certificate of Title in the name of the taxpayer and directed the reconveyance of the said property on the ground that the donation lacked the essential requisite of consent to be valid.  Such decision was affirmed by the Court of Appeals and the Supreme Court which Resolution eventually attained finality upon entry of judgment in 2012.

 

The reconveyance of the subject property pursuant to the court's order was in order to return the property to the legal owner, and thus, not subject to capital gains tax imposed under Section 24(D)(1) of the Tax Code of 1997, as amended