WARNING: PROPERTY FLIPPERS

The BIR continues to go after properties that have been re-assigned/sold prior to turnover.

+ Currently, we are aware of two projects (by known developers) that are under the tax regulator's radar.

+ The BIR is subjecting the assignment to Capital Gains Tax/Creditable Withholding Tax and Doc. Stamp Tax–PLUS PENALTIES from the date of assignment.

+ Unless these tax payments are made, the BIR will withhold the release of the Certificate Authorizing Registration (CAR), preventing the transfer of title from the developer's name to the new owner's (assignee's) name.

+ For example, an assignee received the letter above FIVE years after the assignment.

Isn't the old owner (assignor) supposed to pay for the taxes?

+ From what we know, the BIR chases after both the assignor and the assignee. But since it's a bigger burden to the new owner (through the withholding of the CAR issuance), they'll likely put more pressure on him.

+ In some cases, the assignor could no longer be found (e.g., if he's a foreigner).

Lesson for Buyers: Just assume CGT and DST for property reassignments and avoid problems later on.