Engaged in RE Business

Please, please... If there's only one lesson you could take away from me, it's this: NEVER REGISTER YOURSELF AS A PERSON ENGAGED IN RE BUSINESS.

This past week, we've encountered this problem twice! A broker was convincing a client to register as a lessor so he could issue official receipts, and the owner asked me if he should. For the other one, a sale of a condo (where the owner lives) was subjected to VAT because he was registered as a lessor.

Why do people register themselves as such?

Typically, individuals register themselves as such to be able to issue official receipts for rental properties. Or, individuals wish to enter into the build-and-sell business and find incorporating a company too tedious.

Instead, incorporate a company and use that to register (especially since one-person corporations are now allowed).

What happens if you register as such?

When you register yourself (your personal TIN) as a lessor with the BIR, your TIN will be tagged under PSIC classification "68110". This number means you are into "Real estate buying, selling, renting, leasing, and operating of Self-Owned/Leased Apartment Buildings, Non-Residential, and Dwellings."

When your TIN is tagged as such, ALL YOUR PROPERTIES (including the one you live in) will be classified as Ordinary Assets. Consequently, the sale of any of your assets shall be subjected to VAT and income tax.

You could fight regulators about this all you want, but it's just how things are.