IS CHATGPT CORRECT?

Broker: “Juan, quick one. I was checking something on ChatGPT. My lessor-client wants to lease out his unit, but then he wouldn't be able to get a Certificate of Non-Tenancy. And that would mean the future sale will be VAT-able…but then ChatGPT said this:

✅ 1. VAT on Rent Depends on the Lessor — Not the Condo Corp.

VAT is based on the lessor’s tax status (seller/landlord), NOT the condo corporation.

VAT applies when the lessor: A. Is VAT-registered, OR B. Earns > P3,000,000/year in rental income (gross).

If the lessor is an individual not VAT-registered and earning below the ₱3M threshold → NO VAT.

Juan: That’s partly true. We're looking at two transactions: rent and sale.

Rent Transaction/s:

ChatGPT is correct — if rental income doesn’t exceed Php3M, and lessor is not VAT-registered, there is NO VAT on the rent.

However...

Sale:

The moment he earns rental income, he’s automatically considered engaged in real estate business.

Meaning the condo unit becomes part of his ‘inventory.’

So when he eventually sells it, the sale is treated as business income — and if the selling price is above Php3 Mn (which I presume it is), the sale becomes VAT-able.