Mr. Juan dela Cruz constructed two identical buildings, a two storey house located along the same street at C M.Recto Avenue, Davao City. It cost him Php 4,000,000 to build each building. Building A was utilized as a grocery store and the other one, Building B was used as their residential house. The tax rate of Davao City presently is 2 1/5 percent.
Computation of Annual Tax
Actual Use of Building A = Commercial Building
Market Value (MV) x Assessment Level (AL) =Assessed Value
Php 4,000,000 x 70 %= Php 2,800,000
Assessed Value (AV) x Tax Rate (TR)=Annual Tax
Php 2,800,00 x 2 1/2% or Php 70,000 per year.
Actual Use of Building B =Residential
MV x AL=Assessed Value
Php 4,000,000 x 40% = php 1,600,000
AV x TR-Annual Tax Due
Php 1,600,000 x 2 1/2% Php 40,000 per year.
PHP 70,000 less Php 40,000 = Php 30,000 difference
Reason=Actual use is the basis in the assessment of Real Properties. Commercial buildings take a higher assessment assessment level than the residential ones.
NB: Tax rates differ in one City to the Other. because this is being decided by their local Councils.
Linkback:
https://tubagbohol.mikeligalig.com/index.php?topic=17113.0