Habitually Engaged

Unknown to many real estate investors, there's another way the BIR could classify you as a person "engaged in real estate business"–have more than five transactions in a calendar year.

Background: The last thing you would wish to happen is to be registered as a person "engaged in real estate business" because the moment you do, ALL your properties (yes, including the house you live in) will be subjected to VAT. More about this in the future.

Anyway, back to the story.

The BIR would classify any person who has had at least SIX real estate transactions in the preceding year as "habitually engaged" and therefore tag that taxpayer as a real estate developer.

Now, the law specifies real estate "transactions," so, in my opinion, this pertains to both buying and selling.

So assuming you purchased a condo unit with two parking slots (with the slots having two separate titles) in 2022 and eventually sold them in the same year, that would automatically tag you as a real estate developer.

So, if you're buying multiple properties (more than five), it might be best to time the notarization of the sale documents.