How can a condominium owner get exemption from paying the Capital Gains Tax?
Just sharing with you a portion of my e-mail response to a client's recent inquiry if she can file for exemption from paying the Capital Gains Tax after she has sells her condominium unit in Two Serendra, Fort Bonifacio Global City. She wanted to purchase a larger unit in One Serendra shortly after disposing of her condominium:
As I was advised by my lawyer, you can be exempted from paying the Capital Gains Tax (CGT) from the sale of your condominium if that unit is declared as your primary home in Manila. The other major requirements are: that the replacement primary home is equal to or greater than the value of the one that you disposed of as per what is declared in the BIR for the exemption to be approved; and that you have not availed of any exemption for such within the last 10 years.
There are other requirements for exemption though (NOTE: verify the full list of requirements with a lawyer used to real estate transactions). For simplicity of procedure, you should buy that new condo shortly after you dispose of the first. My other clients had difficulty getting the exemptions when they bought the new property ahead of disposing of the old one (though they ultimately got a BIR ruling after justifying the reason for the exception). You should put the intended capital gains payment in an escrow fund with a bank duly accredited by the BIR. The funds could be released shortly after you show proof of the new purchase. Usually the acquisition should be done within an 18 month period.
If you wish to sell your property in Manila and would like to know more about how to go about getting a capital gains tax exemption, please e-mail me at
msiquijor_mhs@yahoo.com.sg. You may also visit my website at
http://www.architerra.org and leave some feedback regarding this blog post.