RR No. 9-2012: Implements certain Sections of the NIRC of 1997 relative to the non-redemption of properties sold during involuntary sales

Key points

1. Taxes that become due. When a property sold in an involuntary sale is not redeemed, Capital Gains Tax (CGT) is due if it is a capital asset, or Creditable Withholding Tax (CWT) if it is an ordinary asset. Value-Added Tax (VAT) and Documentary Stamp Tax (DST) also become due, whatever the type of proceedings and the personality of the mortgagees or sellers.
2. CGT or CWT by the buyer. The buyer is deemed to have withheld the CGT or CWT. The buyer files the CGT return and remits within 30 days from expiration of the applicable statutory redemption period, or files the CWT return and remits within 10 days following the end of the month after that expiration.
3. December withholding. For taxes withheld in December, the CWT return is filed and the taxes remitted on or before January 15 of the following year.
4. VAT. Where the circumstances warrant VAT, the VAT-registered owner or mortgagor pays it on or before the 20th day or 25th day, whichever is applicable, of the month following the month when the right of redemption prescribes.
5. DST and tax base. The DST return is filed and the tax paid within 5 days after the close of the month after the lapse of the applicable statutory redemption period. CGT, CWT, VAT and DST are based on the higher of the consideration (bid price of the higher bidder), the fair market value or the zonal value under Section 6(E) of the Tax Code.

Who is affected

• Buyers of properties sold in involuntary sales
• VAT-registered owners or mortgagors

Deadlines and effectivity

• CGT: within 30 days from expiration of the redemption period; CWT: within 10 days following the end of the month after expiration (December CWT: on or before January 15 of the following year)
• VAT: 20th or 25th day of the month after the right of redemption prescribes
• DST: within 5 days after the close of the month after the redemption period lapses