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Lecturer

GIGI CABANLAS-ROA, LLB, MBA, REB, REA,


REC
CGT - CAPITAL GAIN TAX

EWT - EXPANDED WITHHOLDING
TAX

DST - DOCUMENTARY STAMP
TAX

EST - ESTATE TAX

VAT - VALUE ADDED TAX

IT - INCOME TAX

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

1990 56-90 Dec. 15/90
1994 1
st
Revision 81-94 Oct. 5 /94
1997 2
nd
Revision 41-97 Oct. 12/97
2006 3
rd
Revision 37-05 June 4/06

Provincial/City Assessor
Realtors/Appraisers
BIR

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
=======

2. CONTRACT PRICE
Selling Price P1,060,000
Less: Assumed Mortgage ( 100,000)
Contract Price P 960,000
========

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
=======

4. GROSS PROFIT
Selling Price P1,060,000
Less: Acquisition Cost
(P1.060M/125%) ( 848,000)
Gross Profit P 212,000
=======


5. GROSS PROFIT RATE FOR TAX PURPOSES
Gross Profit = P212,000
Contract Price P960,000=22.08%
=====

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
==========



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