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REAL ESTATE TAXATION - SOLUTIONS



1. A
Computation:
DST = 2,200,000 x 1.5% = 33,000
Legal Basis:
Section 196, NIRC there shall be collected a documentary stamp tax
based on the consideration contracted to be paid for such realty or on its fair
market value determined in accordance with Section 6(E) of this Code,
whichever is higher.
Section 6(E), NIRCFor 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, or
(2) the fair market value as shown in the schedule of values of the Provincial and
City Assessors.
2. C
Legal Basis:
Section 195, NIRC there shall be collected a documentary stamp tax at
the following rates:
(a) When the amount secured does not exceed Five thousand pesos
(P5,000), Twenty pesos (P20.00).
(b) On each Five thousand pesos (P5,000), or fractional part thereof in
excess of Five thousand pesos (P5,000), an additional tax of Ten pesos
(P10.00).
on any mortgage, pledge, or deed of trust.
3. B
Legal Basis:
Section 86(A)(4), NIRCThe Family Home. - An amount equivalent to
the current fair market value of the decedent's family home: Provided, however,
That if the said current fair market value exceeds One million pesos
(P1,000,000), the excess shall be subject to estate tax.
4. B
Legal Basis:
Revenue Regulation 2-1998, Section 2.57.2(J) where the seller/
transferor is habitually engaged in the real estate business, the creditable
withholding tax rate is 3.0% if the selling price is more than P500,000 but not
more than P2,000,000.
5. B
Legal Basis:
Revenue Regulation 2-1998, Section 2.57.2(J) if the seller/ transferor
is not registered with LUURB or HUDCC, he/ it may prove that he/ it is engaged
in the real estate business by offering other satisfactory evidence (for example,
he/ it consummated during the preceding year at least six (6) taxable real estate
transactions, regardless of amount).
6. B
Legal Basis:
Revenue Regulation 7-2003 Ordinary assets shall refer to all real
properties specifically excluded from the definition of capital assets, namely:
1. Stock in trade of a taxpayer or other real property of a kind which would
properly be included in the inventory of the taxpayer if on hand at the close of
the taxable year; or
2. Real property held by the taxpayer primarily for sale to customers in the
ordinary course of his trade or business; or
3. Real property used in trade or business (i.e., buildings and/or improvements)
of a character which is subject to the allowance for depreciation provided for
under Sec. 34(F) of the Code; or
4. Real property used in trade or business of the taxpayer.





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7. A
Legal Basis:
Section 248(B), NIRC In case of willful neglect to file the return within
the period prescribed, or in case a false or fraudulent return is willfully made, the
penalty to be imposed shall be fifty percent (50%) of the tax or of the deficiency
tax, in case, any payment has been made on the basis of such return before the
discovery of the falsity or fraud.

8. C
Legal Basis:
Section 200(B), NIRC within ten (10) days after the close of the month
when the taxable document was made, signed, issued, accepted, or transferred,
and the tax thereon shall be paid at the same time the aforesaid return is filed.
However, this was superseded by Revenue Regulation 6-2001 dated
August 1, 2001 which provides the DST return shall be filed within five (5) days
after the close of the month.
9. B
Rate = Initial payments = 600,000 = 30% (Deferred payment)
Selling price 2,000,000
Capital gains tax = 2,0000,000 x 6% = 120,000
10. D
Legal Basis:
Section 90(B), NIRC the estate tax return shall be filed within six (6)
months from the decedent's death.
11. C
Formula using straight-line method of depreciation:
Estimated useful life = 100% _
Annual Depreciation Rate
= 100%/ 2.5%
= 40 years
12. D
Legal Basis:
Section 173 to 201, NIRC. The Tax Code did not mention that donation
transaction shall be subjected to documentary stamp tax.
13. D
Legal Basis:
Revenue Regulation 7-2003 The sale of real property located in the
Philippines, classified as ordinary assets, shall be subject to the creditable
withholding tax (expanded).
14. A
Legal Basis:
Section 236(B), NIRC An annual registration fee in the amount of Five
hundred pesos (P500) for every separate or distinct establishment or place of
business, including facility types where sales transactions occur, shall be paid
upon registration and every year thereafter on or before the last day of January.
15. D
Legal Basis:
Section 24(D)(2), NIRC That the Commissioner shall have been duly
notified by the taxpayer within thirty (30) days from the date of sale or disposition
through a prescribed return of his intention to avail of the tax exemption.
16. A
Legal Basis:
Section 86(A)(1)(a), NIRC For actual funeral expenses or in an amount
equal to five percent (5%) of the gross estate, whichever is lower, but in no case
to exceed two hundred thousand pesos (P200,000).







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17. A
Legal Basis:
Section 106(A), NIRC There shall be levied, assessed and collected
on every sale, barter or exchange of goods or properties, value-added tax
equivalent to ten percent (10%) of the gross selling price or gross value in money
of the goods or properties sold, bartered or exchanged, such tax to be paid by
the seller or transferor.
However, this was clarified by Revenue Memorandum Circulars 7-
2006, 8-2006, & 22-2006 which provides the implementation of the VAT rate from
10% to 12% effective February 1, 2006.
18. C
Legal Basis:
Section 24(D)(2), NIRC Capital gains presumed to have been realized
from the sale or disposition of their principal residence by natural persons, the
proceeds of which is fully utilized in acquiring or constructing a new principal
residence within eighteen (18) calendar months from the date of sale or
disposition, shall be exempt from the capital gains tax.

19. C
Reference:
BIR Form 1706. Capital Gains Tax Returnthe return shall be filed
within thirty (30) days following each sale, exchange or disposition of real
property.
Thus, capital gains tax accrues upon the notarization of the deed of sale.
20. B
Legal Basis:
Revenue Ruling 17-2003(J) DST shall accrue upon the execution of
the Deed of Absolute Sale but the basis for the imposition thereof shall be the
gross SP or FMV at the time of the execution of the Contract to Sell.
21. C
Legal Basis:
Section 99(B), NIRCWhen the donee or beneficiary is stranger, the tax
payable by the donor shall be thirty percent (30%) of the net gifts. For the
purpose of this tax, a "stranger", is a person who is not a:
(1) Brother, sister (whether by whole or half-blood), spouse, ancestor and lineal
descendant; or
(2) Relative by consanguinity in the collateral line within the fourth degree of
relationship.
22. C
Legal Basis:
Section 6(E), NIRC. 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 or 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, or
(2) the fair market value as shown in the schedule of values of the
Provincial and City Assessors.
23. A
Legal Basis:
Revenue Regulation 2-1998, Section 2.57.2(J) where the seller/
transferor is habitually engaged in the real estate business, the creditable
withholding tax rate is 1.5% if the selling price is P500,000 or less.







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24. B
Formula to compute selling price inclusive of VAT:
Selling price, inclusive of VAT = VAT + VAT
12%
= 360,000 + 360,000
12%
= 3,360,000
25. D
Legal Basis:
Revenue Regulation 16-2011, Section 3.VAT Exempt Transactions
Sale of residential lot valued at One Million Nine Hundred Nineteen Thousand
Five Hundred Pesos (P1,919,500.00) and below, or house & lot and other
residential dwellings valued at Three Million One Hundred Ninety-Nine Thousand
Two Hundred Pesos (P3,199,200.00) and below.
26. A
Formula to compute tax base subject to CGT:
Selling price 6,500,000
Fair market value:
Land 2,500,000
Improvement 2,000,000 4,500,000
Zonal value:
Land 5,000,000
Improvement 2,000,000 7,000,000
Tax base (higher) 7,000,000

27. C
Legal Basis:
Revenue Regulation 7-2003 dated December 27, 2002 Real
properties acquired by banks through foreclosure sales are considered as their
ordinary assets. However, banks shall not be considered as habitually engaged
in the real estate business..
28. C
Formula to compute CGT on unutilized portion:
CGT on unutilized = Tax Base x CGT Rate x Unutilized portion
portion Gross Selling Price
= 5,000,000 x 6% x 1,000,000
4,000,000
= 75,000
29. D
Legal Basis:
Revenue Regulation 2-1998, Section 2.57.5(B)(1) Exemption from
Withholding sales of real property by a corporation which is registered with
and certified by HLURB or HUDCC as engaged in socialized housing project.
30. D
Legal Basis:
Revenue Regulation 2-1998, Section 2.57.2(J) where the seller/
transferor is not habitually engaged in the real estate business, the creditable
withholding tax rate is 6.0%.