PLEASE PAY EXTRA

Once upon a time, a buyer purchased a pre-selling condo and paid every installment on schedule. Then the pandemic hit, and turnover was delayed.

When the unit was finally ready, the developer sent a surprise. The zonal value had gone up in the meantime, so the developer said the taxes on the sale had gone up too. The buyer was asked to pay the difference.

Is that right?

For the developer's own taxes on the sale, generally not.

When a developer sells real property, its taxes are based on whichever is higher: the selling price or the fair market value (which includes the zonal value). For installment sales, the BIR's withholding tax rules say that value is taken at the time the Contract to Sell is executed, not when the Deed of Absolute Sale is signed years later. A zonal value increase right before turnover shouldn't change that base.

There's one catch. Some costs are computed when the deed is registered, like documentary stamp tax, transfer tax and registration fees. Many Contracts to Sell pass these to the buyer, and they can follow the newer, higher values.

So before you pay an "adjustment," ask the developer for a breakdown:

• Which tax is it for?

• What base did they use, and as of what date?

• Which clause in your Contract to Sell makes you pay it?

If the answer is the developer's own tax, recomputed on a newer zonal value, push back.