[Ask the Tax Whiz] What are the taxes due of real estate business sales?

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rapplerAds.displayAd( "mobile-middle-1" );I am a taxpayer whose nature of business is engaged in real estate business. What are the required BIR Returns to be filed for the sales of real property? In relation to the sales of real property, taxpayers engaged in real estate business are required to file the BIR Form 1606, for the remittance of expanded withholding tax on sale of real property, and BIR Form 2000-OT for its corresponding Documentary Stamp Tax due.



Additionally, lumping of filing for multiple transactions in one return is not allowed, and cannot be used as proof of withholding tax payment for electronic Certificate Authorizing Registration (eCAR).Can I claim the corresponding Income Tax Credit relating to the sales of real property?Yes, if you’re engaged in the real estate business and sold real properties, you can claim it as income tax (IT) credit on the Annual ITR. Provided, the BIR Form 1606 with attached proof of payment shall be the only proof of claiming IT credit, and not BIR Form 2307 as it is discontinued as proof in lieu of the BIR Form 1606.

Remember that the total of tax credits per submitted SAWT shall be total of BIR Form 2307 for transaction/s other than real estate business, and BIR Form 1606 of the Annual ITR.What to do if I have a buyer whose mode of payment is through loans from financing institutions, what documents do I need to issue? In case that the buyer opts to pay or settle the remaining balance by financing institutions (i.e.

, Bank, Pag-Ibig, etc.), the receipt of money by the seller from the financing institution shall be subject to 12% output VAT. The seller, therefore, shall issue documents as evidence of the sale and payment or cash receipt/ collection, as shown below:How about the processing fees, transfer fees, and the like, those that are incumbent on the sale of real property, are these subject to tax?Yes, other fees collected by the seller of real property engaged in real estate business shall be subject to income tax and 12% output VAT.

The content provided in this article above is for general purposes only. If you want to know how these regulations affect your business, CONSULT ACG or email us at [email protected].

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