Author Topic: (2) FAQ About Real Estate Properties-Ang Pangutana Pangita-a sa FAQ NO.1  (Read 1365 times)

tagalomanoy

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Before going to the solution, it is very important to know the words and phrases used in Real Property Appraisal and Assessments.  Among them are the following:

A) Market  Value (MV) = total acquisition or construction cost
B) Assessment Level = A fix percentage applied to the Market Value to arrive at the Assessed Value
This is usually fixed by the local Sanggunian as recommended by the  City Assessor;
C) Assessed Value (AV) = the amount arrrived at when the Market Value is multiplied by the Assessment Level (AL)  This is similar to taxable value
D) Tax Rate (TR) = A fixed percentage rate that the local Sanggunian approved as recommended by the CTO and the City Assessor
E) Actual Use = The predominant use of the building.

Assessed Value = MV x AL
Annual Tax Due = AV x TR

Going to the questions in FAQ No. 1

Construction Cost of the two buildings which are residential and commercial

is Php 175,000 each

Computations:

For the Residential Building

A) Market Value Php 175,000 given in the problem
B) Assessed Value: Php 175,000 x 0 Assessment level= 0 Assessed Value
Note Under the R. A. No. 7160, Sect. 218, Letter l, all buildings whose actual use is residential having a Market Value of not over Php 175,000  takes a o assessment level.
C) Tax Due(applicable to Davao City only)
 
(AV ) 0 x  (TR) 2 1/2% or.025 = 0 tax due, So there is no tax due for the residential building.  However, if the owner wins a lotto and have it improved costing him Php 1,000,000, that would  be taxable (175,000 plus 1 Million less depreciation of the old building)

Tax rate of 2 1/2 is composed of the following:
Basic tax= 1 1/2%
SEF  tax     1.0   
Total          2 1/2%

For the Commercial Building:

Assessed Value= MV X AL or Php 175,000 x 30% or Php 5250.00

Annual tax due= Php 5,250.00 x .025 = Php 131.25


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ALEJANDRO TAGAB LAGANSON, SR.
Purok 25-A, Teachers Village, Calinan, D. C.
Licensed Real Estate Broker PRC 0009807
Real Property Asessing Officer (CSC & DOF)ROR 3351 Email  ad: [email protected]

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A Layman

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Re: (2) FAQ About Real Estate Properties-Ang Pangutana Pangita-a sa FAQ NO.1
« Reply #1 on: January 09, 2009, 12:07:42 PM »
How is EVAT applied to commercial and residential buildings or establishments?

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tagalomanoy

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Re: (2) FAQ About Real Estate Properties-Ang Pangutana Pangita-a sa FAQ NO.1
« Reply #2 on: January 09, 2009, 01:16:38 PM »
I presume that you are an owner of the building whose actual use might be:

A) R4sidential use- EVAT will not apply here because it is the owner of the building who is occupying.

B) Commercial Use-EVAT applies here. Take case case of the following scenario.

Mr. A owns CPG 4 door apartment Building in Tagbilaran City and have it rented to the following
Lessees: B, C, D and E for  Php 10,000  Each per month
However, for reason only known to the building owner, he did not allow Lessee E to deduct the withholding tax of 5% per month

Here how it works:

For Withholding tax-Rent 5% against the gross rental

For Lessee BC and D they give only to Building owner say every 21st pay of the following mont the following:

Lessee B- Php 9500 Cash and Php 500.00 BIR receipt for the 5% (OF pHP 10,000) deducted from the 10,000
LESSEE C-pHP 9,500 cASH PLUS pHP 500.00 bir rECEIPT FOR THE 5% (OF 10,000) WITHHOLDING TAX
LESSEE D-Php 9,500 Cash plus php 500.00 BIR receipt for 5% (of Php 10,000) witholding tax

As rental expenses Lessee BC and D are entitled for a total deduction of Php 120,000 (10,000 x 12 mos) EACH  FROM THEIR INCOME FOR THE YEAR APPLICABLE.  This will reduce the amount of
income tax that they will pay in the pursuit of engaging in business.


On the part of the building Owner A, he has paid in advance the following:

B= 500 x 12 = 6000
C= 500 x 12 =6,000
D= 500 x 12 =6000
Total advance payment= Php 18,000
Ynder this set up, the BIR has made the renter as its agents to collect taxes from the Building owner.  Ssurely the law will be complied with because, if you will not pay the 5% withholdng tax, the equivalent rental expense will be disallowed by the BIR, from being deducted from the Gross Income.

Assuming that the computed interest from rental of Mr. A is Php 40,000
then he has only to pay additional Php 22,000 to complete his income tax


On the other hand, LESEE E can not claim a deduction of 120,000 as rental expense for the current year , because to be allowed a deduction, he must have convinced the Building owner A, that a Php 500.00 d eduction against his rental payment be set aside as withholding tax every month.

IN The event that the BIR will discover that the amount of Php 6,000 as withholding tax, was not deducted from LESSEE E, the BIR can run after the building owner.  Penalties will  be imposed and interest compromise are even added to the charges it appears that there was a deliberate attempt on the part of the building owner to hide his income from Rent.

How Evat Works:

For Goods we usually bought:

Sira Sira Store   goes to SM and bought Php 10,000 worth of shoes.  the 12% tax was Php 1,200.  So the SIRA-SIRA store paid a total of Php Php 11,200

While arriving home, SIRA SIRA Store sold this one pair of shoes to  Customer B for Php 13,000
The EVAT tax was Php 1,560 or a total of Php 14,560.00
Computation of how much Sira Sira Store will pay to the BIR.

From the tax he collected from Customer B Php  1,560.00
Less-Sira-Sira Stores payment to sM                   1,200.00
Balance to be paid by SIRA Sira Store.            Php 360.00

From the illustration, EVAT is ANTI Consuer, anti poor.  Do you know of one Senator who did not make it to the Magic 12.  Why, because of EVAT issue. Whoever is associated with it come election time run the risk of losing his position.


For Rental:

If a building is rented for 20,000 per month, the 12% computation of EVAT is as follows

20,000 divided by 1.12 or Php 17,857.14
Tax due is Php 20,000 minus Php 17,857.14=2,142.86 (Payable tothe BIR monthly)

If you have time, please feel free to go to your BIR who will be more than willing to assist you.
















Linkback: https://tubagbohol.mikeligalig.com/index.php?topic=17091.0
ALEJANDRO TAGAB LAGANSON, SR.
Purok 25-A, Teachers Village, Calinan, D. C.
Licensed Real Estate Broker PRC 0009807
Real Property Asessing Officer (CSC & DOF)ROR 3351 Email  ad: [email protected]

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Re: (2) FAQ About Real Estate Properties-Ang Pangutana Pangita-a sa FAQ NO.1
« Reply #3 on: January 09, 2009, 02:02:58 PM »
Thanks! We got the same perception that EVAT really is anti-consumer or anti-poor. This is one way of offseting funds mismanaged by government spending. In other words, the people are paying much for the inefficiencies of the government. It would just by alright for us if the people feel some availment of the benefits emanating from it. But, that remains to the seen as promised.

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tagalomanoy

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Re: (2) FAQ About Real Estate Properties-Ang Pangutana Pangita-a sa FAQ NO.1
« Reply #4 on: January 09, 2009, 11:04:13 PM »
If you are inside the corridor of power, possibly you can be benefitted.  From the last clerk to the City Mayor naka monitor iyan sila kun sino ang kanilang ka color.  Pag white ka, sila ay red, huwag na lang mag-asa para hindi ka masaktan.  I have been there for 19 years.  I worked as if the office was my own, muntik pa akong ma exile sa  malayung  district because of sulsultant around the power that be.  Yes, that is our present government.  Wala na iyong serviciong totoo.

Linkback: https://tubagbohol.mikeligalig.com/index.php?topic=17091.0
ALEJANDRO TAGAB LAGANSON, SR.
Purok 25-A, Teachers Village, Calinan, D. C.
Licensed Real Estate Broker PRC 0009807
Real Property Asessing Officer (CSC & DOF)ROR 3351 Email  ad: [email protected]

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