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BUYER & SELLER RESOURCES


AFFIDAVIT OF WAIVER BY FOREIGN HUSBAND

In the past, it has been an accepted practice that before a Filipina wife married to alien husband registers a real property under her name, the Register of Deeds, as a matter of pre- requisite, requires that an affidavit of waiver of rights executed by the foreigner spouse must also be presented (LRA Consulta No. 2738, June 23, 2000).

However, in subsequent Consulta Nos. 3543 and 3554 dated March 12, 2003, the LRA Administrator has ruled that the requirement of such affidavit of waiver of rights is a mere surplusage as it serves no useful purpose, other than being void.

 INSTALLMENT SALE: TRANSFER OF RIGHT

For sale of property on installment of deferred payment basis where the Contract to Sell is always executed before the execution of the Deed of Sale, the said Contract to Sell must be attached to the Deed of Absolute Sale executed upon completion of the payments and the duly notarized original copy of both documents must be presented to the RDO for validation of the correctness of payment of all applicable taxes before the issuance of CAR/ TCL.

If upon completion of the payment of the purchase price of real property classified as ordinary asset, but before the execution of the Deed of Sale, the buyer decides to assign his right over the property to another person for a consideration, the assignment shall be considered a separate sale property and, therefore, subject to the creditable/expanded withholding tax(EWT) or final withholding of capital gains tax, as the case may be, which shall be withheld by the assignee of such property, based on the consideration per Deed of Assignment or the fair market value of such property at the time of assignment, whichever is higher, and to DST imposed under Sec. 196 of the same basis.

 It is to be clarified, however , that sale of interest in real property (real property purchased on installment covered by Contract to Sell which was sold by the original buyer before it was fully paid) shall be taxable on the part of the original buyer (now seller) based on the realized gain thereon which is measured by the difference between the agreed consideration and the amount actually paid by the said original buyer. (BIR Revenue Regulation No. 17-2003)

 WAIVER OF HERIDITARY SHARE

 Renunciation by the surviving spouse of his/ her share in the conjugal partnership or absolute community after the dissolution of the marriage in favor of heirs of the deceased spouse or any other person is subject to donor's tax, whereas general renunciation by an heir, including the surviving spouse, of his/her share in the hereditary estate left by the decedent is not subject to donor's tax, unless specifically and categorically done in favor of identified heir/s, to the exclusion or disadvantage of the co-heirs. (BIR RR No. 2-2003)

 CAPITAL GAINS TAX EXEMPTION

 1. In the sale of a family home, the buyer shall with hold from the seller the 6% capital gains tax which shall be deposited in cash or manager's check in interest bearing account with an authorized agent bank (AAB) under an Escrow Agreement between the concerned revenue District Officer, the Seller and Buyer, and AAB

 2. After the escrow deposit, the seller and buyer shall jointly file, within 30 days from the date of sale of the family home, with the RDO the final Capital Gains Tax Returns with no computed tax due.

 3. If within 30 days after the lapse of 18th months from the sale of the family home, the seller fails to submit documentary evidence to prove acquisition of a new family home, he shall be assessed for deficiency capital gains tax, inclusive of penalties and 20% interest per annum computed from the 31st day after the sale of the family home. (BIR RR No. 17-2003)

 TREATMENT OF REALTY ACQUIRED THRU SUCCESSION OR DONATION

 Real property transferred through succession or donation to the heir or done who is not engaged in the real estate business with respect to the real property inherited or donated, and who does not subsequently use such property in trade or business, shall be considered as a capital asset in the hands of the heir or done. (BIR RR No. 7-2003)

 TREATMENT OF REAL PROPERTY SUBJECT OF INVOLUNTARY TRANSFER

 In the case of involuntary transfers of real properties, including expropriation or foreclosure sale, the voluntariness of such sale shall have no effect on the classification of such real property in the hands of the involuntary seller, either as capital asset, as the case may be.

 For example, real properties forming part of the inventory of a real estate dealer, which are foreclosed, shall, for purposes of determining the applicable tax on such foreclosure sale be treated as ordinary assets. (BIR RR No. 7-2003)

AFFIDAVIT OF WAIVER BY FOREIGN HUSBAND

In the past, it has been an accepted practice that before a Filipina wife married to alien husband registers a real property under her name, the Register of Deeds, as a matter of pre- requisite, requires that an affidavit of waiver of rights executed by the foreigner spouse must also be presented (LRA Consulta No. 2738, June 23, 2000).

However, in subsequent Consulta Nos. 3543 and 3554 dated March 12, 2003, the LRA Administrator has ruled that the requirement of such affidavit of waiver of rights is a mere surplusage as it serves no useful purpose, other than being void.

 INSTALLMENT SALE: TRANSFER OF RIGHT

For sale of property on installment of deferred payment basis where the Contract to Sell is always executed before the execution of the Deed of Sale, the said Contract to Sell must be attached to the Deed of Absolute Sale executed upon completion of the payments and the duly notarized original copy of both documents must be presented to the RDO for validation of the correctness of payment of all applicable taxes before the issuance of CAR/ TCL.

If upon completion of the payment of the purchase price of real property classified as ordinary asset, but before the execution of the Deed of Sale, the buyer decides to assign his right over the property to another person for a consideration, the assignment shall be considered a separate sale property and, therefore, subject to the creditable/expanded withholding tax(EWT) or final withholding of capital gains tax, as the case may be, which shall be withheld by the assignee of such property, based on the consideration per Deed of Assignment or the fair market value of such property at the time of assignment, whichever is higher, and to DST imposed under Sec. 196 of the same basis.

 It is to be clarified, however , that sale of interest in real property (real property purchased on installment covered by Contract to Sell which was sold by the original buyer before it was fully paid) shall be taxable on the part of the original buyer (now seller) based on the realized gain thereon which is measured by the difference between the agreed consideration and the amount actually paid by the said original buyer. (BIR Revenue Regulation No. 17-2003)