BIR Ruling No.

Subject Matter Synopsis Date of Issue

025-2015 Permanent structures were built on a February 3,

property which belonged to another. 2015
Both parties executed an agreement,
without monetary consideration, to
exchange their respective properties and
consequently asked for exemption from
CGT and DST imposed by Sections 24 (D)
and 196 of the Tax Code, as amended.

According to Section 2 and 108 of

Presidential Decree 1529, the Regional
Trial Court has authority to act on all
petitions filed after the original
registration of title. Thus, any change or
amendment on the land titles or in the
ownership of such properties should be
done by seeking judicial relief. Absent
such determination, exemption from
CGT and DST cannot be granted.

038-2015 The sale of the old principal residence February 9,

occurred after the new principal 2015
residence was acquired. The sale of the
old principal residence must have
preceded the acquisition of a new
principal residence for the exemption
from Capital Gains Tax to apply.
Furthermore, it is required under RR 2-
98 that the amount representing the 6%
CGT must be deposited under an Escrow
Agreement between the concerned
Revenue District Officer, the Seller and
the Transferee, and the Authorized
agent bank. Release occurs if the
proceeds of the sale has in fact been
utilized in the acquisition or construction
 of the Seller/Transferors new principal
residence within 18 calendar months
from date of the said sale or disposition.

051-2015 A trust account was absorbed by two February 24,

banks. The trust account was used by 2015
the banks to acquire real estate
properties. The trust account was closed
and the real estate properties were re-
conveyed to the Trustors.

In this case there is no real transfer of

ownership since the Trustee acquired
the property by virtue of a Trust
Agreement which the Trustee re-
conveyed the property to the Trustor
will not be treated as another transfer
separate and distinct from the sale
between the original owner and the
Trustee. The conveyance is treated as a
continuation and confirmation of title in
favor of the ultimate and real beneficiary
of the subject properties. Therefore they
are not liable for Capital Gains Tax and
Creditable withholding tax. Neither is
such a re-conveyance subject to VAT,
Gift Tax, and Documentary Stamp Tax.
130-2015 In 2007, the Regional Trial Court of April 30, 2015
Makati ordered the cancellation of a
Transfer Certificate of Title in the name
of the taxpayer and directed the
reconveyance of the said property on
the ground that the donation lacked the
essential requisite of consent to be valid.
Such decision was affirmed by the Court
of Appeals and the Supreme Court which
Resolution eventually attained finality
upon entry of judgment in 2012.

The reconveyance of the subject

property pursuant to the court's order
was in order to return the property to
the legal owner, and thus, not subject to
capital gains tax imposed under Section
24(D)(1) of the Tax Code of 1997, as
amended