Refund Of Capital Gains Tax

[chrisandging]

Hi all, I have read that if you sell a home and then buy another it is possible to claim back the CGT that was paid when the papers were processed for the sale of the first house.

Has anybody else heard of this rule?

Has anybody managed to claim back their tax!

It would make my year to get a refund!

[Call me bubba]

may I suggest that you seek a

1."real estate" handbook that is offered from a "LEGAL" bookstore

( inquire at National bookstore or 5th floor megamall opposite side of SM) that should answer most of your questions,

2.near your town, I have seen a BIR OFFICE(on the road to Lemery) why not seek or ask them as they should have the answer

good luck on your refund quest

[Dave Hounddriver]

Has anybody else heard of this rule?

I have seen the rule. It is available on the Internet. I have not seen anyone get a refund. In fact, if you read there site, the funds have to be held in escrow for up to 18 months while you build your new home and when the requirement is met you are exempt from paying it. Nowhere have I seen or heard of people actually getting a refund once they have paid it. Here is the wording from the BIR site:

16) Who are conditionally exempt from the payment of Final Capital Gains Tax?

Natural persons who dispose their principal residence, provided that the following criteria are met:

The proceeds of the sale of the principal residence have been fully utilized in acquiring or constructing new principal residence within eighteen (18) calendar months from the date of sale or disposition;

The historical cost or adjusted basis of the real property sold or disposed will be carried over to the new principal residence built or acquired;

The Commissioner has been duly notified, through a prescribed return, within thirty (30) days from the date of sale or disposition of the person’s intention to avail of the tax exemption;

Exemption was availed only once every ten (10) years; and

There is no full utilization of the proceeds of sale or disposition. The portion of the gain presumed to have been realized from the sale or disposition will be subject to Capital Gains Tax.

In case of sale/transfer of principal residence, the Buyer/Transferee shall withhold from the seller and shall deduct from the agreed selling price/consideration the 6% capital gains tax which shall be deposited in cash or manager’s check in interest-bearing account with an Authorized Agent Bank (AAB) under an Escrow Agreement between the concerned Revenue District Officer, the Seller and the Transferee, and the AAB to the effect that the amount so deposited, including its interest yield, shall only be released to such Transferor upon certification by the said RDO that the proceeds of the sale/disposition thereof has, in fact, been utilized in the acquisition or construction of the Seller/Transferor’s new principal residence within eighteen (18) calendar months from date of the said sale or disposition. The date of sale or disposition of a property refers to the date of notarization of the document evidencing the transfer of said property. In general, the term “Escrow” means a scroll, writing or deed, delivered by the grantor, promisor or obligor into the hands of a third person, to be held by the latter until the happening of a contingency or performance of a condition, and then by him delivered to the grantee, promise or obligee.

http://www.bir.gov.ph/taxinfo/tax_capgin.htm

[chrisandging]

Well too late this time, that 30 day rule got me.

Thank you Dave for digging this info out for me.

[OnMyWay]

I think this is relevant point. My cute CPA tells me that nobody every gets a refund. If you come out ahead (due to CGT claim back or any reason) and are due something back, you receive it as a credit towards future taxes. Nobody gets a refund check like we do in the US. At the corporate level, there is a market for buying and selling these tax credits.

On a related happy note, I just found out today that I am getting an unexpected large refund on my 2011 US taxes.