REAL ESTATE TAXATION

Lecturer
GIGI CABANLAS-ROA, LLB, MBA, REB, REA,
REC
TAXES RELATED TO REAL
ESTATE TRANSACTIONS
 CGT- CAPITAL GAIN TAX

 EWT - EXPANDED WITHHOLDING TA

 DST - DOCUMENTARY STAMP TAX

 EST - ESTATE TAX

 VAT - VALUE ADDED TAX

 IT- INCOME TAX

Republic Act No. 8424 – Comprehensive Tax Reform
Program (CTRP)

 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.
RECOMMENDED ZONAL VALUE

DEPT ORDERS EFFECTIVITY

1990 56-90 Dec. 15/90

1994 – 1st Revision 81-94 Oct. 5 /94
1997 – 2nd Revision 41-97 Oct. 12/97
2006 – 3rd Revision 37-05 June 4/06
 MEMBERS OR PARTY TO THE
RECOMMENDATION OF ZONAL VALUE
 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 1st 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.
 DEFINITION OF TERMS
 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.
 CLASSIFICATION LEGEND
 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
 AGRICULTURAL LANDS
CODE CLASSIFICATION
A1RICELAND IRRIGATED
A2RICE LAND UNIRRIGATED
A3UPLAND
A4COCOLAND
A5CITRUS LAND
A6FISHPOND
A7SWAMP
A8NIPA LAND
A9COTTON LAND
A10 COGON
A11 ABACA LAND
 AGRICULTURAL LANDS
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
 AGRICULTURAL LANDS
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
 AGRICULTURAL LANDS
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
 AGRICULTURAL LANDS
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
 CGT – CAPITAL GAIN TAX
 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.
TO DETERMINE TAXABLE PORTION

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 individual’s
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.

 WHEN AND WHERE TO FILE
CAPITAL GAIN TAX RETURN
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.
 CAPITAL GAIN TAX TOOK EFFECT
SEPTEMBER 7, 1979
 1979-1985

TAX BASE
SELLING PRICE LESS COST OF SALES/EXPENSES
= NET GAIN
100,000.00 – 10%
OVER - 20%
 CAPITAL GAIN TAX TOOK EFFECT
SEPTEMBER 7, 1979
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
 CAPITAL GAIN TAX TOOK EFFECT
SEPTEMBER 7, 1979
 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 PropertyP4.30M
(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
======
CAPITAL GAIN TAX PROBLEM:
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 Assessor’s fair
market value for lot is P500,000.00 and for
building is P400,000.00. Broker’s
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. BROKER’S COMMISSION:
P1,000,000 x 5% P50,000
 PROBLEM: OVERPRICING COMMISSION
INSTEAD OF STANDARD 5%
COMMISSION
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 P1MP 50,000

50,000
-12,500*
37,500
EXPANDED WITHHOLDING TAX
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
EXPANDED WITHHOLDING TAX
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%
 INSTALLMENT SALE-PAYMENT IN THE YEAR OF
SALE DO NOT EXCEED 25% OF THE SELLING
PRICE
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.
 INSTALLMENT SALE-PAYMENT IN THE YEAR OF
SALE DO NOT EXCEED 25% OF THE SELLING
PRICE
 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 10th 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 Assessor’s 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 decedent’s 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

CIR’s 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 Assessor’s
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 P1,000,000

3 years before death, show disposition

of loan
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

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% 500,000

deducted)
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
 VAT COMPUTATION
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
 INCOME TAX
 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 Percentage Tax VAT
Quarterly Income Tax VAT/ Income Tax
Annual Final ITR 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)

 PROBLEM SOLVING
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)
 ANSWERS
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
========
 ANSWERS
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
=======
 ANSWERS
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
=======
 PROBLEM SOLVING
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
 ANSWERS
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: ½ of 1% x P5.50M = P 27,500
======
 PROBLEM SOLVING
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
 Assessor’s 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.
 ANSWER

Capital Gain Tax {6% of P3.375M(150

sq.m.@P22,500)}

= P202,500
======
 PROBLEM SOLVING
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 Gee’s 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?
 ANSWERS
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

========
 PROBLEM SOLVING
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.
 ANSWERS
(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) Broker’s commission:
5% of P6,857,142.86 P 342,857.14
==========
THANK YOU