By Elijah Joseph C. Tubayan
Reporter
THE BUREAU of Internal Revenue (BIR) recently amended rules on the
valuation of real property gifts for the computation of the donor’s tax
in order to ease compliance.
Revenue Regulation (RR) 17-2018, signed by Finance Secretary Carlos
G. Dominguez III on July 24 but published last week, said that “the
valuation of gifts in the form of property shall follow the rules set
forth in Section 5,” from Section 6 previously, provided that “the
reckoning point for valuation shall be the date when the donation is
made.”
This means that payment of tax on such properties are now based on
gross estate value according to their fair market value at the time of
the decedent’s death.
Previously under RR 12-2018 — the consolidated implementing rules and
regulations on imposing estate and donors taxes — the value of such
property was determined by deducting claims against the estate; claims
of the deceased against insolvent persons; unpaid mortgages, taxes and
casualty losses; property previously taxed; transfers for public use;
current fair market value of the decedent’s family home; amount received
by heirs and the net share of the surviving spouse in the conjugal
partnership or community property.
BIR Deputy Commissioner Marissa O. Cabreros said in a mobile phone
message yesterday that the new regulation “provided ease in compliance.”
Sought for comment, Tax Management Association of the Philippines
President Raymund S. Gallardo said the previous rule had “nothing to do
with valuation.”
“Under RR12 -2018, valuation of properties subject to Donor’s Tax
made reference to Sec. 6 which is about the computation of the net
estate, which has nothing to do with valuation. Sec. 5 of RR 12-2018 is
about valuation of properties included in the gross estate of a
decedent,” Mr. Gallardo explained in a mobile phone message over the
weekend.
“Valuation of properties subject of gratuitous transfers such as
donation and inheritance follow the same principle of valuation, such
that the valuation of real properties in computing the estate or donor’s
tax is the higher of the fair market value (FMV) as determined by the
Commissioner (which is normally the zonal value) or the FMV as shown in
the values fixed by provincial or city assessors at the time of death of
the decedent or date when the gift was made,” he added.
Republic Act No 10963, or the Tax Reform for Acceleration and
Inclusion law, simplified estate and donor’s taxes at fixed rate of six
percent.
“For the purposes of prescribing real property values, the
Commissioner is authorized to divide the Philippines into different
zones or areas shall, upon consultation with competent appraisers, both
from the private and public sectors, determine the fair market value of
real properties located in each zone or area,” read the regulation.
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