REAL ESTATE LAWS AND TAXATION
P 1,919,500
Effective 2012. a real estate broker shall be subject to VAT if the total income for the year exceeds
P 1,919,500
Effective January 1, 2012, the ceiling for exemption from VAT of the sale of a *residential lot* has been increased to
3 years
For late payment of *special education fund tax*, the lot owner shall be liable to pay a maximum total interest for
On 1st day of January
For real estates taxes, the Local Government Code provides the same accrues
CGT - Capital gains tax - (a.k.a. final tax; final withholding tax) (tax on the gain from the sale of capital assets)
For the sale of a property classified as *capital asset* in the amount of P2,300,000, the tax that will be imposed will be
Ordinary asset - (banks are not considered habitually engaged in real estate business) (Revenue Regulations No. 7-2003)
Foreclosed property of LCC Bank if sold, shall be classified as what kind of asset
P15 for every P1,000 or fraction thereof
How much will be the doc. stamps tax to be paid in case a foreclosed property is redeemed by the owner within the period of redemption
P 4,500 1,800,000 * 0.50 (residential) = 900,000 900,000 * 0.02 (tax rate) = 18,000 18,000 / 4 (quarterly)
How much will be the quarterly tax payment for a residential parcel of land valued at P 1,800,000 if the tax rate is 2%
P 45,000 (3,000,000 x 0.06 = 180,000 180,000 x 0.25)
How much will be the surcharge for the late payment of capital gains tax on the sale of a house and lot in the amount of P 3,000,000
5 days after month of expiration of redemption period
In an auction sale of a foreclosed lot, Mr. Beed won and the property was not redeemed. The documentary stamp tax must be paid within
On January 1 of the next year
In case of all assessments and reassessments made after January 1 of any year, the same shall take effect
30 days from receipt of decision
In case of an *unfavourable decision* by the Local Board of Assessment Appeals, the same may be appealed to the CBAA within
2% per month
In case of auction sale of real property due to delinquent real estate taxes, the owner may redeem the real property sold provided there shall be a payment of interest at the rate of
Bid price or zonal value or assessor's value whichever is higher
In case of non-redemption of foreclosed property, the capital gains tax or creditable withholding tax shall be paid based on
Pay the real estate tax
In case of payment of real estate taxes under protest, the first thing the taxpayer must do is to
Within 12 months
In case of sale of at least two contiguous lots in 2013, the same shall be subject to VAT if it exceeds P 1,919,500 and sold to one buyer within a period of
P 160,000 - (400,000 [house & lot] x 40% [allowable max. selling price 64 sqm])
In case of socialized housing, the ceiling for the value of the lot as per the BIR is
1 year from date of sale
In case of unpaid or delinquent taxes, pursuant to the local government code, the local government shall thereafter sell the property at public auction but with tbe right of the owner to redeem the property within
Fair market value x assessment level - (AV = FMV x AL)
In computing the *assessed value* of the property, one will use the following formula
Actual use by the person in possession
In local taxation, real property shall be classified for assessment purposes on the basis of its
Approved local tax ordinance
In order for the local government to impose and implement the tax due for real estate taxes for the city, it must be through
Capital gains tax
In the sale of *principal residence* and exemption thereof, the following shall be exempted to the seller
Actual Use
It refers to the purpose for which the property is principally or predominantly utilized by the person in possession thereof
6% (not habitually engaged)
A manufacturing corporation bought a parcel of vacant lot in a residential subdivision as the price was very low and attractive. When sold, the corporation shall be subject to the tax rate on the sale of
P 1,035,000 (2,300,000 * 0.45) - (use FMV for appraisal; use zonal value for taxation)
A parcel of land was assessed as commercial at a rate of 45% with a fair market value of P 2,300,000, although the zonal value is P3,000,000. What will be the assessed value?
Selling Price - (gross selling price or fair market value [zonal value], whichever is higher, will be subject to 6% CGT)
A parcel of land was sold at P5,000,000 but the BIR Zonal Value was P4,800,000 while the local assessor's fair market value is P 2,500,000 and it was appraised at P5,500,000. What will be the basis of capital gains tax if sold
25%
A person who failed to fully utilize the proceeds of the sale of his principal residence shall be assessed additional deficiency capital gains tax, interest and penalty of
3% percentage tax (broker's income does not exceed P 1,919,200) - (if income exceeds P1,919,200, must be VAT-registered)
A real estate broker will earn P 1,800,000 for 2012 in professional fees. The broker shall be subject to
1% of the assessed value
A special levy is the special education fund tax which shall be at a rate of
60% of the actual cost of such projects - (RPT Code)
A special levy may be imposed for lands specially benefited by public works projects or improvements funded by the local government unit: provided, the special levy shall not exceed
CAR - Certificate authorizing registration
After full payment of the capital gains tax, the BIR shall issue to the owner the following document
1/2 of the land
Agricultural lands, more than one (1) hectare in area, suitable for cultivation, dairying, inland fishery and other agricultural uses may be subject to *idle land tax* if it remains uncultivated or unimproved by the owner or owners to the extent of
On the current and fair market value
An assessor in valuing the property of the land owner must base his value of the property
P 12,800
An owner will rent out a residential apartment this 2012 and will be exempted from VAT provided the monthly rent does not exceed
18 calendar months (condition for exemption of CGT of sale of principal residence)
Arnold sold his residence to buy a bigger house. He must buy his new residence within a period of
3 hectares
Beneficiaries under the Comprehensive Agrarian Reform Program and CARPER shall be awarded an area not exceeding
2% of the assessed value - (RPT = RPT Rate x Assessed Value) (Max. RPT rate: Cities (in entire Phils.) and municipalities in Metro Manila: 2% Outside Metro Manila: 1%)
Cebu City imposed a new tax rate for the *basic real property tax* for property owners, which however may not exceed
10 years
Lands acquired by beneficiaries under the CARP shall not be sold, transferred or conveyed except through hereditary succession. or to the government or to the LBP, or to other qualified beneficiaries through the DAR for a period of
10 years
Mang Benito will declare his real property for the first time and it shall be assessed for taxes for the period during which it would have been liable but in no case for more than
10 years
Mr. Jomari sold his principal residence and he may only avail of this exemption from capital gains tax only once every
2% per month (interest) - (max. 36 months, so max. interest rate: 72%)
Mr. Parco failed to pay his *real estate tax* due on time and he will be subject to a penalty equivalent to
5% - (Income payments subject to CWT/EWT: Rentals: 5%)
Mr. Sensen rented a house which he was also using as his office. What will be the *withholding tax* on the *rent* he has to deduct ?
24% (max. delinquency tax) - (Real Property Tax Code)
Mr. de Guzman failed to pay his real estate tax due for two years and he will be subject to a penalty equivalent to a total of
15% - (Income payments subject to CWT/EWT: Brokers & agents: 10% for <700K, 15% for >700K)
Ms. Rica, a real estate broker, already earned P 800,000 in commissions for the first two months. Thereafter, the withholding tax of Ms. Rica should be
5 years
No action for the collection of the real estate tax, whether administrative or judicial, shall be instituted after the expiration of
Prepaid income tax (tax for ordinary assets)
The *creditable withholding tax* for the sale of a lot by a developer is also referred to as
5 years
The CARPER primarily extends the land distribution program of CARP by
20% (advanced payment of RPT) - (early payment discount if paid on or before March of the same year)
The City of Baguio may provide a discount for early payment of the annual tax in the discount amount not exceeding
Registrar of Deeds of the City
The Local Board of Assessment Appeals in the city shall be headed by a Chairman who shall be
City assessor - (LBAA members: RD, prosecutor, engr.)
The Local Board of Assessment Appeals is composed of members provided under the Local Gov't Code. Which one is not a member - (a. Registrar of Deeds of the City b. City prosecutor c. City engineer d. City assessor)
1/2 of 1% assessed value
The Quezon City local government imposed starting January 2012 a socialized housing tax in the amount of
Put in escrow
The amount of exempted capital gains tax in the sale of principal residence shall be
Fair market value of the improvement of the assessor
The assessment level of the improvements of a property owned by Ms. Berna will be based on the classification and
*Tax declaration* of the property
The assessment level of your property may also be found in the
3 years
The assessor is mandated to undertake a general revision of real property assessments every
1% of the assessed value
The basic real property tax to be imposed by the sangguniang panlalawigan in a province shall not exceed
25% - (25% of the tax amount due plus 20% interest per annum)
The broker was to pay the taxes on the sale to the BIR but missed the due date due to sickness. How much will be the penalty surcharge?
Documentary stamp tax
The donation of a house and lot to the daughter is not subject to the following tax and charges - (a. Transfer tax b. Donor's tax c. Documentary stamp tax d. Registration fees)
Building improvements
The following does not have a BIR zonal value - (a. Condominium unit b. Agricultural land c. Condominium parking space d. Building improvements)
President of the Philippines
The following may condone real estate taxes in whole or in part
Vacation house of the owner - (capital asset: not used in the ordinary course of trade or business)
The following property if one were to sell the same would be classified as a capital asset - (a. Office warehouse of a corporation b. Lots sold by a developer c. Vacation house of the owner d. Condominium units sold to the public)
Sale of condominium units at P4,000,000 by developer - (Sale by owner of the house at 5M - CGT, therefore not VAT 2.3M & 1.5M - VAT exemption for below P 3,199,200) - (2005 VAT exemption was for below P 2M)
The following sale in 2012 shall be subject to value added tax - (a. Sale by owner of the house at 5M b. Sale of condominium units at 4M by developer c. Sale of residential house by developer at 2.3M d. Sale of residential lot of developer at 1.5M)
Sale of a rented commercial lot worth P 3,400,000 (lot exceeds P1,919,500) - (VAT-exempt transactions: 1. Capital assets 2. Low-cost housing 3. Specialized housing w/ price ceiling P 225K 4. Res'l lot ≤ P1,919,500; house & lot ≤ P3,199,200)
The following sale of property is not exempted from value added tax - (a. Sale of a rented commercial lot worth P 3,400,000 b. Sale of socialized housing units c. Sale of house and lot in the amount of P 2,500,000 d. Sale of principal residence)
5% of the assessed value
The government may impose a tax on lands not fully utilized or the idle land tax not exceeding
Land with unfavorable physical factors
The idle land tax does not apply to the following property - (a. Uncultivated agricultural land of 3 hectares b. Rawland of unimproved 5,000 square meters c. Land with unfavorable physical factors d. 2 hectares of land suitable for farming, 1/2 of which is unimproved)
Local Government Code of 1991
The law governing taxation of real property for real estate taxes is
RA 9700
The law referred to as Comprehensive Agrarian Reform Program Extension with Reforms (CARPER) is
Unpaid delinquent real estate taxes
The local government shall cause a notice of delinquency and thereafter the property sold at public auction in case of
P 7,200 - (P 10,000 x 2% [penalty per mo.] x 36 mos. [max. no. of months] - Ignore SEF b/c it is not asked)
The owner failed to pay his basic real estate tax of *P10,000* in 2006 and P 5,000 SEF. How much will be the total interest to be paid for the *unpaid basic real property* for the *5 years* delinquency
4 equal quarterly payments - (on or before last day of March, June, Sept., Dec.)
The real estate tax on the house and lot owned by Ms. Millie may be paid without penalty interest in
P 100,000
The real estate taxes for socialized housing of Quezon City shall be imposed on land with an assessed value of more than
30 days from expiration of redemption period
The right of redemption already lapsed last January 6 and the winning bidder must pay the capital gains tax within what period
40% - (Maximum Assessment Level rates: Residential 20% Timberland 20% Agricultural 40% Commercial 50% Industrial 50% Mineral 50%)
The sangguniang panlalawigan may determine the assessment level for *agricultural land* provided it does not exceed
Local School Boards
The special education fund tax collected by the municipality shall be allocated to the
Final tax
The tax paid to BIR on a sale of a condo unit used as residence by the owner is also considered a
Local Government Code of 1991
The taxation on ownership of real property by a person is governed by
Title must be registered under name of a natural person
To avail of exemption of capital gains tax on sale of principal residence, one important requirement is
30 days from date of notarization of sale
To be exempted on the sale of principal residence, one must inform the BIR of his intention to avail of exemption within how many days
Assessed value x tax rate
To compute for basic real property tax, the owner will use the formula
P 480,000 (4,000,000 * 0.12) - (Combined because bought within a year)
Transrealty Inc. sold two adjacent residential Jots to Mr. Trias in a subdivision this March 2012, Lot 1 at P 1,800,000 and Lot 2 at P 2,200,000. What will be the VAT paid by Mr. Trias
3 years
Under the Local Government Code, the owner must file a sworn declaration of value of the property once every
P 50,000
Under the local government code, the city may impose a *socialized housing tax* of 0.5% of the assessed value of lands over
P3,199,200 (sale of other residential dwellings)
A developer who will sell a residential condominium unit in 2012 will not be subject to VAT if the sale price does not exceed
Batangas City
A lot was sold located in Batangas City. The owner who was residing abroad wanted to pay the taxes on sale already although his local residence was in Manila and the buyer in Taguig. Where is the capital gains tax on the sale to be paid?
The next quarter after reassessment
A *change in actual use* of the property reported to the assessor shall take effect beginning
Creditable withholding tax (ordinary asset, so not CWT)
A bank foreclosed a condominium unit and after it was consolidated in the name of the bank sold the property worth P6,500,000. What will be the tax initially to be paid by the bank on the sale
City Assessor's office
A buyer can get the value of the improvements of the house in Quezon City being sold, which may be found in the
February 5 - (w/in 5 days after the close of the month when the taxable document was made)
A developer sold a condo unit on Jan. 5, had the sale notarized on Jan. 7. Up to when should the developer pay the *documentary stamps tax*?
Fair market value in the tax declaration - (Real Property Tax; RA 7160)
In a sale of a house and lot, the basis of the tax for the *improvements* shall be based on
Commercial
If land is in a residential area but the building is used for commercial purposes, the assessment level classification shall be based on
City Assessor's Office
If the tax declaration of a house & lot in a city is more than 3 years old, the seller must get a certification it is still the latest from
Registration with HLURB
One of the ways to show that one is habitually engaged in the real estate business for BIR purposes
P 2,250,000 commercial: 50% 4,500,000 * 0.50
Ruther owned a residential house used for business and assessed as commercial. What will the assessed value of the land if the land's fair market value is P 4,500,000
3% - (Selling price of 500 K or less: 1.5% 500 K - 2 M: 3% above 2 M: 5%) - (Not habitually engaged: 6%)
SMBC Corporation developed a subdivision and was selling lots in the amount of P 1,800,000 contract price. The sale shall be subject to a *creditable withholding tax* rate of
60 days from date of transfer
Persons who *transfer ownership* of their property to another have to notify the assessor within what period
60 days from receipt of notice of assessment
Roger did not agree with the *assessment* made by the assessor on his property. Roger may appeal the same within what period
P 240,000 (2,000,000 * 0.12)
Spouses Ed and Susie are both real estate brokers. For 2012, Ed will earn P 1,850,000 and Susie will earn P 2,000,000. How much will be the VAT paid by the spouses
P 10,000,000 - selling price
What is the basis of the capital gains tax on the sale of a commercial lot if the selling price is P10,000,000, but the BIR Zonal Values showed that it is P 8,000,000 and the Assessor Fair Market Value is P 6,000,000 but actual value is P 12,000,000 if the owner would want a lower tax to be paid
P 100 (5000 x 0.02) - (penalty surcharge of 2% per mo.)
What will be the interest monthly in case the owner fails to pay the basic real estate taxes due in the amount of P 5,000
5 years
When the land ceases to be economically feasible and sound for agricultural purposes, the DAR, may authorize the reclassification or conversion of the land and its disposition after the lapse of
