6.Pay dues and assessments.
7. Give other unit owners the
priority right to buy his unit (right of first
refusal). If so required by the master deed.
Dues and Assessments
1.The Deed of Restriction usually
provides for two kinds of assessments:
a.) Regular assessment – a monthly
obligation to fund ordinary project expenses, such as
security, garbage collection, repair and maintenance of
the common areas, electricity and water bills on the
common areas and realty tax and insurance on the common
areas.
b.) Special assessment – this is
imposed as the need arises, such as the need for
replacement of the generator.
Extent of interest in common
areas
In the absence of any provision
in the master deed, all unit owners shall have equal
share in the common areas. If the intent is to pro-rate
the unit owners’ interest on the common areas, such fact
must be expressly provided in the master deed. The
interest based on floor area of ownership is arrived at
by dividing the unit area by the total floor area of all
condominium units.
Condominium Corporation
Optional and Mandatory Requirement.
The condominium corporation is optional if no unit will
be sold in foreigners. However, the corporation is
mandatory if some units, not exceeding forty percent
interest in the project, will be sold to foreigners, in
which case title to the land will be transferred in the
name of the condominium corporation and thus comply with
the constitutional mandate that corporations may acquire
real estate provided that at least sixty percent
of its capital or membership is Filipino
1.Principal Purposes: a) To hold
title to the land and b) To set as the management
body of the condominium project.
2.Conflict with Master Deed. In case
of conflict between the articles of incorporation of
the condominium corporation and the master deed of
the condominium project, the latter should always
prevail because:
a) It is the matter deed which
gives birth in the condominium project. The project
cannot exist without a master deed, but it can exist
without a condominium corporation.
The condominium law specifically
provides that the articles of incorporation and by-laws
of the condominium corporation shall not conflict with
the master deed.
REAL ESTATE TAXATION
Assessment Level for Land:
Classification
Not more than
Residential 20%
of FMV
Commercial/ Industrial/
Mineral 50% of FMV
Agricultural 40%
of FMV
Timber 20%
of FMV Scientific/ Cultural/ Hospital
15% of FMV
Assessment Level of
Improvement:
FMV over Not over Resd’l
Comm’l/ Ind’l Agr’l Timber
175,000
0% 0% 0% 0%
175,000 300,000
10% 30% 25% 45%
300,000 500,000
20% 35% 30% 50%
500,000 750,000
25% 40% 35% 55%
750,000 1,000,000
30% 50% 40% 60%
1,000,000 2,000,000
35% 60% 45% 65%
2,000,000 5,000,000
40% 70% 50% 70%
5,000,000 10,000,000 50%
75% 50% 70%
10,000,000
60% 80% 50% 70%
Rate of Real Estate Tax
a) In Provinces – not
exceeding one percent of assessed value.
b In Cities and Metro Manila
Municipalities – not exceeding two percent of
assessed value.
Special Education Fund Tax
– an annual levy on real estate equivalent to one
percent of assessed value which shall be in addition
to the basic real estate tax
Date of Payment of basic
realty tax and SEF tax:
a)May be paid in four equal quarterly
installments on or before March 31, June 30,
September 30, and December 31.
Payment in advance of the schedule is
entitled to not more than twenty percent
discount.
Delinquent payment shall be subject to
interest of two percent per month but in no case
to exceed thirty six months
CAPITAL GAINS TAX
Rate and Basis Tax – the rate of
capital gains tax is six percent computed on the
following basis:
a) Sale of Lot: - Basis is price
per deed of sale or lot zonal value, whichever is
higher.
b) Sale is Lot with improvement: -
Basis is price per deed of sale, or lot zonal value plus
improvement value, whichever is higher.
Conditions for exemption from
Capital Gains Tax:
a) The seller is a natural person
and the capital asset sold is his principal residence
(family home).
b) The proceeds of the sale will
be used to acquire / purchase construct a new
family home.
c) The BIR is duly notified by
the taxpayer within thirty days from the date of sale
through a prescribed return, of his intention to avail
of the tax exemption.
d) The tax exemption can only be
availed of once every ten years.
If there is no full utilization for
the proceeds of the sale, the portion of the gain
presumed to have been realized from the sales shall be
subject to capital gains tax
Installment Sale – A sale is
considered on installment basis when the initial payment
in the year of sale is twenty-five percent or less, in
which case the transferor may opt to pay initially a
portion of the tax in accordance with the following
formula:
Initial Tax = Initial Payment
x Total Tax
Total Price
WITHHOLDING TAX
Transactions Subject to Withholding
Tax – Sale, exchange, or transfer of ordinary asset by
natural persons, corporations, estate or trust.
Rates and Basis – Computed on the same
basis as capital gains tax, the rates of creditable
withholding tax.
Rate of Withholding Tax
0% - When the property sold is part of
an HLURB registered socialized housing project of the
seller
1.5% - When the seller is habitually
engaged in real estate business and the price does not
exceed P500,000.00
3.0% - When the seller is habitually
engaged in real estate business and the price is over
P500,000.00
5.0% - When the seller is habitually
engaged in real estate business and the price exceeds P
2 million.
6.0% - When the seller is not
habitually engaged in real estate business.
TRANSFER TAX
1.Concept – A tax payable to the
local government (City or Provincial Treasurer) for
the sale or other disposition of real estate,
regardless of classification of the property.
2.The rate is not more than one
percent for properties located in cities and
municipalities in Metro Manila, and not more than
one-half percent for properties outside of Metro
Manila.
3.Basis is the contract price or
market value per tax declaration whichever is
higher. However, the local government may enact an
ordinance prescribing as basis the contract price or
zonal value, whichever is higher.
DOCUMENTARY STAMPS
1.On Sales – P15.00 per P1,000.00 or
a major fraction thereof, computed on the same basis
as capital gains tax, and payable within five days
following the month when the document was notarized.
2.On Mortgages – P20.00 for first
P5,000.00 and P10.00 per P5,000.00 after the first
P5,000.00
On leases – P3.00 for first P2,000.00
or fraction thereof, and additional P1.00 for every
P1,000.00 or fraction thereof in excess of the first
P2,000.00 for each year of the term of the lease
SALIENT
FEATURES OF E-VAT RELATING TO REAL ESTATE
Concept : Expand Value Added Tax is an indirect tax. It
can be passed on to the buyer. However, it is should be
inputed or built-in the price. The sales contract cannot
stipulate the “E-VAT shall be for the account of the
buyer.”
Transactions subject to E-VAT
1.Sale, barter or exchange or real
estate held primarily for sale to customers in the
ordinary course of trade or business where the
annual gross sales or invoice exceed P750,000.00,
except sale by real estate dealers and/or lessors of
house and lot and other residential dwellings price
P1.5 Million and below.
2.Lease of real estate for commercial
use when the annual gross receipts exceed
P750,000.00
3.Lease of real estate for
residential use when the monthly rental per unit
exceeds P10,000,000 and the annual gross receipts
exceed P750,000.00
Liability as non-VAT taxpayer
1.In cases where the real estate
dealer or lessor is not subject to E-VAT, he shall
be liable as a non-VAT taxpayer subject to three
percent tax. However, he has the option to register
as VAT taxpayer subject to 10% VAT with the benefit
of input tax.
Commissions of real estate brokers are
subject to E-VAT if the annual gross receipts exceed
P550,000.00, otherwise they shall be subject to seven
percent tax.
Real estate dealers are not allowed to
withhold the E-VAT from commissions of real estate
brokers
Computations of E-VAT payable
1.E-VAT payable = output tax (sales
receipts x 1/11) less input tax (purchase
receipts x 1/11)
Credit for input tax can only be
availed of if the payee is VAT-registered.
Basis of E-VAT
1.Cash/Deferred payment plan –
Basis is the contract price or zonal value whichever
is higher. In the absence of zonal value, basis
shall be market value per tax declaration or
contract price, whichever is higher.
Installment Plan
– Basis is actual consideration received, including
interests and other charges. However, upon full payment,
if the zonal value is higher than the total receipts /
collection, the additional E-VAT shall be paid
accordingly
Expenses for execution and
registration of sale In the absence of any stipulation
to the contrary, the seller shall pay for the execution
and registration of the sale.