Tuesday, October 19, 2010

The Tax you pay when you sell your home

Taken from Apartment Therapy site.

First, let me just share this nice picture perfect kitchen which I found in a great site discussing home designs done by the owners themselves. The site is Apartment Therapy.  I just can’t help but admire what the owners did on this side of their home. The Island nook and the lights they placed for that nook was really nice.

If you look into this picture more you will notice there is also this Origami Light which the owners got from Venice, CA. Another very interesting thing the owners did was they made a magnetic chalk board on the wall fronting that nook. Here’s the pic and view of that portion of that living space.

From Apartment Therapy site. Great chalk
wall fronting the island nook.

Really creative. The owner even provided details on how they did it. This is how you should do it.

Hi guys - A couple answers:
1) the magnetic chalkboard wall is two layers: magnetic paint from the hardware store layered under chalkboard paint bought on amazon.com. Important note: do follow the directions for "smoothing" the chalkboard paint. Also, put on as many layers of magnetic paint as possible - it takes at least 4-5 coats for it to work.
2) No supports under the island overhang, but the butcher block is screwed into the cabinets, which are screwed into the floor, so very stable. And it's not a very deep cantilever. Do it! We absolutely love it.
3) The bar stools are from CB2 - the Phoenix carbon barstools. Really comfy.
4) Many, many bowls of lemons, when you have 3 lemon trees. We don't know what to do with all of them!
5) Shout-out to my neighbors! Yay, Eastsiders!

For a full detail of their story visit it here: http://www.apartmenttherapy.com/la/zach-and-heathers-home-sweet-home-127273

Anyway, enough of that. The tax that one should settle once they sell their home would be the Capital Gains Tax (CGT) and the Documentary Stamp Tax (DST). The CGT is 6% and the DST is 1.5% for a total of 7.5%.  The BIR’s policy is to apply that tax on the “Highest Determined Value”. Whether from Sale Value, Zonal or market value whichever is higher.

The form for CGT is BIR Form 1706  and the DST is BIR Form 2000-OT (One-Time Transactions). Just click the link to these forms so you can view the actual document. And other important information at the back of these forms. Save and print a copy.

To be filed with the RDO having jurisdiction over the place where the property being transferred is located.

Please take note the filing date for 1706. Filed within thirty (30) days following each sale, exchange or disposition of real property - In case of installment sale, the return shall be filed within thirty (30) days following the receipt of the 1st downpayment and within thirty (30) days following each subsequent installment payment - One return is filed for every transfer document regardless of the number of each property sold, exchanged or disposed of.

For 2000-OT. The return shall be filed and the tax paid within (5) days after the close of the month when the taxable document was made, signed, issued, accepted or transferred.

What’s the importance in settling these taxes? Well, the purpose why you need to pay this is because you will need a Certificate Authorizing Registration (CAR) which will be issued by the BIR once you settle the said taxes.

This is the document you will need to submit to the Registry of Deeds in the Local Municipality having jurisdiction over address of your home.  So that you or your buyer can request to transfer the property under the new owners name. In which the said office will issue a new TCT or title in the name of the buyer or new owner. The CAR is a requirement for that transfer to be processed.

Yes, there is a local tax and fee that the local municipality will charge for the processing of that transfer. The BIR is a separate office from the local municipal governments. So for information on their fees and taxes you may call them or view their official webpage.

For more information you may call the BIR Contact Center 981-8888 or email them at contact_us@cctr.bir.gov.ph or hmp@bir.gov.ph. HMP stands for Handang Maglinkod Program of the BIR.

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