BIR RMC 75-2026 HIGHLIGHTS

On July 8, the BIR issued RMC No. 75-2026, answering FAQs on taxation, including several that affect RE transactions.

I find this memo particularly useful because it gives practitioners a written basis for challenging interpretations that are inconsistent with official BIR policy.

Here are some that caught my attention:

1. The spouse's TIN is not required.

It is generally needed only if the property is conjugal property. So take note of the headings ("Sps. A and B" vs. "A married to B").

2. A major clarification on ordinary assets.

All properties of a real estate lessor that are leased, offered for lease, or used in business are ordinary assets.

My interpretation: Conversely, a property that is not for lease, not being offered for lease, and not used in business (such as a vacant residential lot) may be treated as a capital asset even if the owner is a lessor.

3. Unpaid VAT is not a ground to withhold eCAR.

I've been waiting for an official BIR issuance confirming this, and this Circular finally provides one. The eCAR should not be held hostage because of unpaid VAT for the sale.

4. If CGT is FAO Buyer, BIR should not add back the CGT to the Selling Price.

Even if the buyer shoulders the seller's Capital Gains Tax, the CGT is still computed based on the higher of the selling price or zonal value.

The rationale given before was that if the buyer paid for the CGT, the BIR presumed the stated selling price had been reduced to lessen the tax liability. As such, some examiners would "gross up" the selling price by adding the CGT back when computing the tax base.

5. The classification in the Tax Dec wins.

The BIR clarified that the property's classification in the Tax Declaration—not its actual use or the predominant use of adjacent properties—shall be used in determining the applicable zonal value for tax purposes.

For example, if a property in the middle of Ayala Triangle is still classified as Agricultural in its Tax Declaration, the Agricultural zonal value should be applied, even if the surrounding properties are commercial.

There are several other useful clarifications in the memo. I highly recommend reading it.