How to Secure A BIR Certificate Authorizing Registration (CAR) And Tax Clearance For The Sale Of Real Property Classified As A Capital Asset

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One of the most important documents that you need in order to transfer a title of a property from the seller to the buyer is the Certificate Authorizing Registration (CAR) and Tax Clearance (TCL) from the Bureau of Internal Revenue (BIR). The CAR and TCL is your proof that the proper taxes on the transaction have been paid. The Register of Deeds requires the presentation of these documents as a pre-requisite for title transfer.

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What is the process?

The first step is to have a notarized document evidencing the sale of the real property classified as a capital asset, usually a Deed of Absolute Sale. You may find samples of this document through google, including here and here.

Next, the taxes need to be paid. You may refer to previous posts on Capital Gains Tax (CGT) and Documentary Stamps Tax (DST).

After you have paid the taxes, you need to request for the issuance of a CAR and TCL from the Revenue District Office where the real property is located. You need to submit the documents supporting the transaction, as well as proof that the correct taxes (both the type of tax and amount of tax), have been paid. The Checklist of Documentary Requirements is in the annexes of Revenue Memorandum Order (RMO) No. 15-03, in particular, Annex “A”. For additional documents, refer to Revenue Memorandum Circular (RMC) No. 76-07 dated October 25, 2007.

The process flowchart is in Annex “L” of the Annexes of RMO 15-03.

Please take note that the CAR for the transfer of real property shall be released by the Revenue District Office (RDO) where the real property is located. Thus, it is important for you to determine the correct RDO since you will be paying the taxes in the Authorized Agent banks (AAB’s) of such RDO.

It is possible that you may think a property falls under the jurisdiction of one RDO when in fact it is under another RDO. If you have already paid the taxes in an AAB of another RDO, you may have to undergo certain processes to transfer your payments to the correct RDO. So, my advice is to look at the map of the coverage of each RDO (there should be a big map at the RDO) to check if indeed the property falls within the jurisdiction of the said RDO.

Mandatory Requirements

For a sale of real property considered as a capital asset subject to capital gains tax (CGT), the mandatory requirements are as follows:

  • Tax Identification Number (TIN) of buyer and seller [If one of them does not have a TIN, get a TIN by filling out and submitting BIR Form No. 1904]
  • Notarized Deed of Absolute Sale/Document of Transfer. Bring the original and at least two photocopies. The photocopies will be compared against the original and the BIR will retain only the photocopies.
    • Notarization fee is usually 1% of the selling price, but some notaries public may charge a lower fee. Just make sure that the notary public is a real one.
    • Prepare at least five copies of the Deed of Absolute Sale (one for the notary, one for the buyer, one for the seller, one for the BIR, and one for the Registry of Deeds).
    • Prepare photocopies of two government-issued ID’s each of the buyer and the seller. You need the information in the said ID’s in the acknowledgment of the Deed (indicate the name, ID number, date issued, place issued, date of validity).
    • Owner’s copy of the Transfer Certificate of Title (TCT), Condominium Certificate of Title (CCT), or Original Certificate of Title (OCT). Bring the original and at least two photocopies. The photocopies will be compared against the original and the BIR will retain only the photocopies.
  • If applicable, Sworn Declaration of No Improvement by at least one (1) of the transferees or Certificate of No Improvement issued by the Assessor’s Office
  • Get a Certified True Copy of the latest Tax Declaration from the City Assessor’s Office.
    • According to the Quezon City government website, you will need:
      • Authorization from the property owner;
      • Photocopy of a Valid ID of the requesting party;
      • Computer print-out from EDP or any reference such as realty tax payment, title, or old tax declaration for purposes of verification
      • Certification fee of P50.00 plus P20.00 secretary’s fee (if to be used for BIR)
  • Official Receipt/Deposit slip evidencing receipt by the owner of the payment of the purchase price
  • Duly validated tax return as proof of payment of taxes

Requirements as added by RMC No. 76-2007:

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  1. Photocopy of the official receipts issued by the seller, for purposes of determining whether the sale of real property is on cash basis, a deferred payment sale (when payments in the year of sale exceed 25% of the selling price) or on installment plan (when payments in the year of sale do not exceed 25% of the selling price). The original copy of the official receipts shall be presented to the Bureau for authentication during the processing of the application for Certificate Authorizing Registration (CAR). However, if the seller is not engaged in business, the acknowledgement receipts issued by the seller to the buyer or any proof of payment shall be presented.
  2. Certified true copy of the original CAR (copy of the Registry of Deeds) pertaining to the transfer of property prior to the issuance of Original/Transfer Certificate of Title (OCT/TCT) or Condominium Certificate of Title (CCT) which is the subject of the current sale/transfer, or certification issued by the Registry of Deeds indicating the serial number of the CAR, date of issuance of CAR, the Revenue District Office Number of the district office that issued the CAR, the name of the Revenue District Officer who signed the CAR, the type of taxes paid and the amount of payment per tax type.

Additional requirements include:

  • Notarized Special Power of Attorney (SPA), if the person who signed the document is not the owner which appears on the Title. You may find samples of this document through google – here is one.
  • Certification of the Philippine Consulate, if the document is executed abroad. The SPA will be either consularized or authenticated. The document will usually have a red ribbon in front.
  • Location plan/Vicinity map if the zonal value cannot be readily determined based on the documents submitted. I think using google maps (maps.google.com) may suffice.
  • Such other requirements as may be required by law/rulings/regulations/other issuances

I suggest that you already have the checklist of documentary requirements ready, and have one file containing all the originals and two sets of photocopies so that the BIR One-Time Transaction (ONETT) officer will have an easy time evaluating your documents.

One-Time Transaction (ONETT) Computation

The BIR’s ONETT team will also be relying on this computation sheet so I suggest you make your own computation so you can compare it with the computation of the BIR. The computation sheet can also be found in Annex “B” of RMO No. 15-03.

If all documents are complete, the CAR and TCL should be ready after around two (2) weeks. Just call the contact person at the number on the Claim Slip or “CS” (Annex “C” of the RMO 15-03) and they will give you to inquire if the CAR is ready. When you call, be sure to have the claim slip with you so you are ready with the CS No., date filed, and the name of the transferor and transferee.

If you are too busy to do the nitty-gritty of title transfer yourself, you may wish to get a free quote from OMI Land Title Inc. just tell them we referred you.

Hope this helps!

~

Cherry Vi M. Saldua-Castillo

Real Estate Broker, Lawyer, and CPA
PRC Real Estate Broker License No. 3187
PRC CPA License No. 0102054
Roll of Attorneys No. 55239

2013 Internal Education Head, REBAP-LMP

 

Text by Jay Castillo and Cherry Castillo. Copyright © 2008 – 2013 All rights reserved.

Full disclosure: If you get the services of http://www.omilandtitle.com/ for title transfer, we are entitled to a modest referral fee.

Certificate Authorizing Registration image from raissarobles.com

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About Cherry Castillo

is a Real Estate Broker (PRC Real Estate Broker License No. 3187), Lawyer (Roll of Attorneys No. 55239), and CPA (PRC CPA License No. 0102054). She is the 2013 Internal Education Head of REBAP-LMP

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  • Benedict dela Cruz

    Gud day po! San po b mkukuha ang license to sell at exemption cert. Hinihingi po kcng reqs s BIR un from homeowners assoc pero ang bngay po s akin ng HOA ay secretarys cert at board resolution n nkpaloob n bnbgyan ng krapatan ang presidente ng HOA n pumirma at mgreceive ng papers pero hndi po inaprubahan ng BIR dhl hndi dw go exempt ung from association to beneficiaries.tulungan nyo po aq matagal n po kc nabili ng magulang q ung lupa hanggang ngaun wla png titulo.TCT lng po n nkpangalan p s association

    • http://www.foreclosurephilippines.com Jay Castillo

      Yung License-To-Sell, sa HLURB po nakukuha yon. Please get their contact details sa http://www.hlurb.gov.ph Pakitanong na din po sa kanila kung saan nakakakuha ng exemption certificate.

  • Jane

    Good morning Miss Cherry,

    BIR official is asking for the original copy of CAR for us to have a transaction with them. However i recall that they got the original copy and gave us the original duplicate copy. Can we transact with this original duplicate copy?

    Thank you,
    Jane

    • http://www.foreclosurephilippines.com Jay Castillo

      Hi Jane, yes, the original duplicate copy (the yellow copy) should suffice.

      • Jane

        Thank you very much Atty. What should I do If they do not want to accept the yellow copy (CAR). They are asking for the Blue Copy (CAR).

  • carla e sollesta

    Hi atty.
    I am selling our family residence and as i gather info from BIR website it is exempted from payment of CGT provided proceeds of sale is utilized to purchase the new family residence. Upon inquiry with BIR, it seems such exemption does not exists. What are the requirements to avail of this exemption? I have read that there’s a time frame of 30 days from execution of deed of sale. When I approached another BIR personnel she told me to comply first with the requirements for CGT and after i comply them she’ll give me requirements for the tax exemption. What I am afraid of is that I might not be able to catch up with the time limit given from date of deed of Sale. Please help. Thanks

  • Ruth Caramoan

    Good day, Ma’am Cherry & Sir Jay!

    I wish you could impart your knowledge regarding this:
    The owner of a a unit townhouse was able to acquire it while he was still single, so it was indicated on the TCT. Now, the wife is asking me, as her real estate broker, if they should change his status to “married to (wife’s name)” and what will happen if they didn’t change it?
    As to my opinion… since there are supporting documents like their marriage certificate & children’s birth certificate, there would be no problem… but I don’t know if it’s really right. I thought also that if they wanted to change it, they may do so ( may also include wife as co-owner or even the children). But can you impart your knowledge as how it is done as well as the documents needed?
    Thanks & waiting for your reply.
    Hope to learn from you more.
    God bless!

    Dr. Ruth Caramoan
    LREB#0013116