RR No. 3-2012: Prescribes the effectivity of threshold amounts for sale of residential lot, sale of house and lot, lease of residential unit and sale or lease of goods or properties or performance of services covered by Section 109 (P), (Q) and (V) of the Tax Code of 1997, as amended

Summary

RR No. 3-2012 prescribes the effectivity of the threshold amounts for sale of residential lots and houses and lots, and for lease of residential units, covered by Section 109 (P), (Q) and (V) of the Tax Code of 1997, as amended.

Key points

1. Effectivity of RR No. 16-2011 thresholds. The new thresholds in RR No. 16-2011 apply when the instrument of sale is executed and notarized on or after January 1, 2012. The instrument may be a deed of absolute sale, deed of conditional sale or otherwise.
2. VAT on sales. A sale of a residential lot with gross selling price exceeding P 1,919,500.00, or a house and lot or other residential dwelling exceeding P 3,199,200.00, is subject to 12% output VAT.
3. Earlier instruments. For instruments executed and notarized on or after Nov. 1, 2005 but before January 1, 2012, the thresholds are P 1,500,000 and P 2,500,000. The excess is subject to 10% output VAT, and starting Feb. 1, 2006, to 12%.
4. VAT exemption. Sales of a residential lot valued at P 1,919,500.00 and below, or house and lot valued at P 3,199,200.00 and below, are VAT exempt if the instrument was executed and notarized on or after January 1, 2012. The amounts are adjusted every three (3) years using the Consumer Price Index, published through revenue regulations issued not later than March 31 of each year.

Who is affected

• Sellers of residential lots and houses and lots
• Lessors of residential units

Deadlines and effectivity

• Takes effect starting January 1, 2012
• Earlier thresholds: instruments from Nov. 1, 2005 to before January 1, 2012

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