RR No. 13-99: Prescribes the regulations for the exemption of a citizen or a resident alien individual from Capital Gains Tax on the sale, exchange or disposition of his principal residence

Summary

RR No. 13-99, issued September 14, 1999, prescribes the rules for exempting a citizen or resident alien individual from the 6% Capital Gains Tax on the sale, exchange or disposition of his principal residence.

Key points

1. Sworn Declaration. The seller submits a Sworn Declaration of intent to avail of the exemption, with the required documents, to the Revenue District Office having jurisdiction over the residence. This must be done within (30) days from the date of the sale, exchange or disposition.
2. Use of proceeds. The proceeds must be fully used to acquire or construct a new principal residence within eighteen (18) calendar months from the date of the sale, exchange or disposition. If the proceeds are not entirely used, the Capital Gains Tax is computed under the formula in the Regulations.
3. Failure to use proceeds. If the proceeds are not used in full or in part within the 18-month period, the right to exemption did not arise on the unutilized amount. The tax then becomes due and demandable on the 31st day after the date of the sale, exchange or disposition.
4. Exchange for a condominium unit. A principal residence disposed in exchange for a condominium unit is not subject to the Capital Gains Tax prescribed here. The condition is that the taxpayer-transferor uses the condominium unit as his new principal residence.

Who is affected

• Citizens and resident alien individuals selling their principal residence

Deadlines and effectivity

• Sworn Declaration within (30) days from the sale
• Proceeds used within eighteen (18) calendar months
• Unused amount: tax due on the 31st day after the sale

Summary by Tax Resources PH. It is not a substitute for the full text of the issuance or professional advice.