Description.
The Community Mortgage Program (CMP) is a mortgage financing program of the Social Housing Finance Corporation (SHFC) which assists legally organized associations of underprivileged and homeless citizens to purchase and develop a tract of land under the concept of community ownership. The primary objective of the program is to assist residents of blighted areas to own the lots they occupy, or where they choose to relocate to and eventually improve their neighborhood and homes to the extent of their affordability.
Under Republic Act (RA) No. 7279, known as the Urban Development and Housing Act of 1992, the sale of real property which shall be utilized for a socialized housing project under the CMP is exempt from the Capital Gains Tax or ordinary Income Tax and its corresponding creditable withholding tax. The said sale however is subject to the payment of the Documentary Stamp Tax (DST).
Legal Reference.
Section 196 of the Tax Code of 1997.
Section 32(b) of RA 7279;
Procedures and Compliance Requirements.
The application for the issuance of the Tax Exemption Certificate for socialized housing projects covered under the CMP shall be filed with the Legal and Legislative Division, Rm. 709, 7th Floor, BIR National Office, together with the complete documentary requirements therefor. The Tax Exemption Certificate shall be the basis of the RDO having jurisdiction over the real property sold for the issuance of the Tax Clearance and Certificate Authorizing Registration (CAR/TCL) necessary for the transfer of the title of the real property.
Checklist of Documentary Requirements (click here)
Tax Forms.
BIR Tax Form 2000 for the DST.
Related Revenue and Other Issuances.
Revenue Regulations No. 17-2001 Revenue Regulations (RR) No. 17-2001 (implementing the provisions on Community Mortgage Program of RA No. 7279, otherwise known as the "Urban Development and Housing Act of 1992"), specifically repealed Section 4.C.2 and Section 5.I of RR No. 9-93 and Section 4.C(b) and Section 5.F and G of RR No. 11-97.
Revenue Memorandum Circular (RMC) No. 42-2001 (Circularizing the Tax Incentives of Sellers of Real Properties in Existing Areas for Priority Development (APDs) Sites, and in other Areas that may be Identified by the Local Government Units as Suitable for Socialized Housing Projects under R.A. No. 7279, Otherwise Known as the "Urban Development and Housing Act of 1992" and the Valuation of the Subject Real Properties for National Internal Revenue Tax Purposes)
Revenue Memorandum Circular (RMC) No. 35-2014 (Circularizing Relevant Portions of Housing and Urban Development Coordinating Council (HUDCC) Resolution No. 1, Series of 2013, Approving the Adjustment of the Price Ceiling for Socialized Housing), adjusted the ceiling price for horizontal socialized housing from P400,000.00 per house and lot to P450,000.00.
Revenue Memorandum Circular (RMC) No. 36-2011 (BIR Rulings on Socialized Housing under Republic Act No. 7279), clarifies that the price ceiling for the sale of socialized lots only shall not exceed forty percent (40%) of the maximum limit prescribed for the house and lot package.
