TOO MANY PROPERTY DEALS

Unknown to many, there’s a non-obvious way the BIR can subject the sale to VAT and CWT to a real estate transaction.

...when the seller has more than 5 real estate transactions in one year.

Why this matters

Once BIR classifies someone as "habitually engaged in real estate transactions", they will no longer be taxed like a regular individual selling personal assets.

Instead, they WILL be treated as someone selling in the course of trade or business — which will open the door to VAT exposure for ALL OF THEIR PROPERTIES–regardless if used for business.

Does the BIR really check?

Yes. There was a recent transaction where the sale was suddenly subjected to VAT because the seller exceeded the threshold.

In the BIR's letter to the seller, they enumerated ALL the seller’s prior transfers, going several years back. These included purchases from Developers and re-sale of properties in the secondary market.

In the letter, they cited Section 2(F) of Revenue Regulations (RR) No. 11-2018 and Section 3(a)(4) of RR No. 7-2003 as the legal basis.

How does the BIR count "transactions"?

The BIR tracks the number of eCARs issued which in turn follows the number of titles transferred. So if your condo unit and parking slot have separate titles, they will be treated as separate individual transactions.

Takeaway

If you’re an investor buying multiple properties, it will be wise to:

✅ plan your acquisitions and disposals

✅ avoid clustering too many transfers into one calendar year

✅ remember: separate titles will mean separate “transactions”

And if you’re a broker, you should be confirming the seller’s transaction count well before closing day.

Because the worst possible time to discover this is when the title transfer is already in motion — and the seller refuses to accept that the sale may be treated differently for tax purposes.

Also, if you're representing the buyer, this is why you ALWAYS ALWAYS ALWAYS put,

"CGT or VAT and CWT (whichever applies) shall be for the account of the Seller."