Tax on Non-redemption of Properties under Involuntary Sale

Revenue Regulations No. 9-2012 dated June 1, 2012 (RR 9-2012) is entitled as “Implementing Sections 24(D)(1), 27(D)(5), 57, 106 and 196 of the National Internal Revenue Code of 1997 on Non-redemption of Properties Sold During Involuntary Sale.”

RR 9-2012 is issued to take immediately in order to guide the buyers and sellers of properties under involuntary sales (e.g. mortgage foreclosure). In case of non-redemption of properties sold during involuntary sales, regardless of the type of proceedings and the personality of the mortgagees/selling persons or entities, hereunder are the rules:

Subject property is CAPITAL ASSET:

• Capital Gains Tax (CGT) within thirty (30) days from the expiration of the applicable statutory redemption period;
• Documentary Stamp Tax (DST) within five (5) days after the close of the month after the lapse of the applicable statutory redemption period;

Subject property is ORDINARY ASSET:

• Creditable Withholding Tax (CWT) return within ten (10) days after the close of the month after the lapse of the applicable statutory redemption period;
• Value Added Tax (VAT) on or before the 20th (monthly) or 25th (quarterly) of the month following the month the right of redemption prescribes.
• Documentary Stamp Tax (DST) within five (5) days after the close of the month after the lapse of the applicable statutory redemption period;

The above taxes shall be based on whichever the of the consideration (bid price of the highest bidder) or the fair market value or the zonal value in accordance with Section 6(E) of the Tax Code, as amended.  All regulations, rulings or orders, or portions thereof which are inconsistent with the provisions of RR 9-2012 are hereby revoked, repealed or amended accordingly.

Reference:

Revenue Regulations No. 9-2012

Disclaimer: This article is for general conceptual guidance only and is not a substitute for an expert opinion. Please consult your preferred tax and/or legal consultant for the specific details applicable to your circumstances. For comments, you may also please send mail at info(@)taxacctgcenter.ph, or you may post a question at Tax and Accounting Center Forum and participate therein.

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