FAQs on the Government’s T.R.A.I.N.

Question: Can I just choose to “donate” a property to a buyer (who’s a stranger) since the tax base for donations is USUALLY lower?

Tax Base for Capital Gains Tax/Donor’s Tax with TRAIN
  • Capital Gains Tax (6%) – higher of the selling price (typically the base), zonal value, or the fair market value as determined by the City Assessor
  • Donor’s Tax (6%) – higher of the zonal value or the fair market value as determined by the City Assessor
No; you’ll have a hard time depositing the proceeds (of the sale) in a bank. When the Buyer/Donee (the supposed buyer) gives the payment to you, the payment, if and when deposited, will likely be flagged due to the Anti Money Laundering Act (AMLA — deposits Php1 Mn and above are automatically flagged and questioned by the bank). Without any Deed of Absolute Sale to show, I’m not sure how you would be able to deposit it in a bank.

Question: Would it be better for me to just hold on to my real estate properties up to death than donate them to heirs especially since estate taxes are at 6% AND I can use certain deductions to lower the tax base?

While you may use certain deductions to the gross estate, chances are zonal values/FMV have gone up as well, consequently increasing the tax base. Unless you hit the bucket soon, the increase in the determined/assessed land values may ultimately increase the estate tax to be paid).

Question: My lolo passed away 10 years ago and we still haven’t settled his estate. Does this mean that we only have to pay 6% of the value of his estate? Which value for the estate should we use, the value when he died or the value today? Also, what happens to the penalty for non-filing/interest charges?

For now, the estate tax portion of TRAIN only covers deaths that occur beginning January 1, 2018. What you’re talking about is probably the tax amnesty. Please note that the Tax Amnesty is separate and distinct from the TRAIN. Drafts have been routed and they project for the tax amnesty program to be released within the 1Q2018.

Question: The BIR Revenue Memorandum Circular No. 3-2018 issued on January 4, 2018 mentions that BIR Form 2000-OT, the Doc. Stamp Tax Declaration/Return One Time Transactions increased by 100%. Does this mean that Doc. Stamp Tax for real estate transactions is now at 3%?

No. BIR RMC 3-2018 does not mention Alphanumeric Tax Code (ATC) No. 122, which is the Doc. Stamp Tax for real estate transactions. Simply put, the Doc. Stamp Tax for real estate transactions still remains at 1.5%.

DISCLAIMER: This material, which is strictly for information purposes only. The views and opinions expressed in this article are those of Juan Patag’s and do not necessarily reflect the position of RE/MAX Capital, any other RE/MAX franchise, or of Rockwell Land. Any information is subject to change without prior notice. No liability whatsoever is accepted for any loss that may arise (whether direct or consequential) from any use of the information contained herein. Information Each RE/MAX franchise is independently owned and operated.

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