Question & AnswerQ&A (BIR REVENUE REGULATIONS NO. 4-99)
The regulations amend Revenue Memorandum Order No. 29-86 regarding the payment of capital gains tax and documentary stamp tax on extrajudicial foreclosure sales of capital assets initiated by banks, finance, and insurance companies, pursuant to sections of the Tax Code of 1997.
The certificate of title of the mortgagor shall be cancelled and a new certificate issued in the name of the purchaser after registration of the final court order confirming the sale.
The mortgagor's certificate of title shall not be cancelled but a brief memorandum about the sale shall be annotated on it. If the property is redeemed, a deed of redemption is filed and noted as a memorandum on the certificate.
A certificate of sale executed by the officer conducting the sale is filed and a brief memorandum is made on the certificate of title. If there is non-redemption, a final deed of sale or sworn statement of non-redemption is filed, followed by cancellation of the old title and issuance of a new certificate in the purchaser's name.
Capital gains tax becomes due only upon the expiration of the one-year redemption period if the mortgagor does not redeem the property, and it is based on the highest bidder's price.
No, capital gains tax is not imposed because no sale or transfer occurred and no gain was realized.
Only the P15 documentary stamp tax is imposed under Section 188 of the Tax Code as no actual sale or transfer of real property happened.
The tax must be paid by the person making, signing, issuing, accepting, or transferring the document relating to the real property. If one party is exempt, the non-exempt party is liable.
Capital gains tax must be paid within thirty days after the one-year redemption period expires, while the documentary stamp tax return should be filed within ten days after the month following the lapse of the redemption period and paid based on the bid price.
A Tax Clearance Certificate (TCL) or Certificate Authorizing Registration (CAR) showing full payment of capital gains tax and documentary stamp tax, supported by validated tax returns, must be presented.