Bir Tax On Mortgage?

[JonPalawan]

After 5 1/2 years, my attorney who wrote up my mortgage finally tells me that I'm obligated to pay BIR 5% of the mortgage amount each month. Can anyone confirm that this is true?

[Dave Hounddriver]

I'm obligated to pay BIR 5% of the mortgage amount each month

 

We had a discussion about B.I.R. a while back but I cannot find it.  Seems there are a lot of ways we are supposed to pay tax to B.I.R. but unless we are challenged, few volunteer to pay.  Some of the ways that come to mind are when you collect mortgage interest, when you collect rent, and then there is gift tax when you give your partner a gift of a house or money or a 'free loan'.  If any of those situations apply to you then you should either contact an accountant or tax attorney.  Of course you could wait until the B.I.R. says something to you like most of us do.  :th_imstupid:  :buttkick:  :3_12_31[1]: But your honor, I did not know I had to pay tax.

[JonPalawan]

 

I'm obligated to pay BIR 5% of the mortgage amount each month

The tax lawyer/accountant I talked to today told me I had to pay 5% tax on that lease that I pay to live in my house. The house is not a business, just my place of residence. It's not lease payments that I'm receiving.

 

[Thomas]

After 5 1/2 years, my attorney who wrote up my mortgage finally tells me that I'm obligated to pay BIR 5% of the mortgage amount each month. Can anyone confirm that this is true?

The tax lawyer/accountant I talked to today told me I had to pay 5% tax on that lease that I pay to live in my house. The house is not a business, just my place of residence. It's not lease payments that I'm receiving.

Almost no tax things are 5 % of the profit/revenue so it seem your lawyer say wrong.  A question though is if he tell to high or to low   :)  

Are you PAYING, NOT recieving?  Then the lawyer is SURE WRONG (except perhaps if he has done a realy STUPID solution :mocking:

 

Are you sure you haven't missunderstood?  Perhaps the lawyer talk about the PROPERTY tax?  

Depending of where you live and some definitions of the property, but mostly it's around 1 % PER YEAR of the property VALUE, but because of the property value is much higher than the lease, in SOME cases it just HAPPEN it's similar as 5 % per month of the lease amount.

To WHERE do the lawyer say you need to pay?     Perhaps he want 5 % in his OWN pocket...  :mocking:

Edited March 5, 2015 by Thomas

[JonPalawan]

 

After 5 1/2 years, my attorney who wrote up my mortgage finally tells me that I'm obligated to pay BIR 5% of the mortgage amount each month. Can anyone confirm that this is true?

The tax lawyer/accountant I talked to today told me I had to pay 5% tax on that lease that I pay to live in my house. The house is not a business, just my place of residence. It's not lease payments that I'm receiving.

Almost no tax things are 5 % of the profit/revenue so it seem your lawyer say wrong.  A question though is if he tell to high or to low   :)  

Are you PAYING, NOT recieving?  Then the lawyer is SURE WRONG (except perhaps if he has done a realy STUPID solution :mocking:

I am paying the true owner of the property a lease amount every month. The lease is properly annotated upon the title.

 

Are you sure you haven't missunderstood?  Perhaps the lawyer talk about the PROPERTY tax?  

No, property tax is a separate issue altogether. Even though it's the owner's responsibility to pay the property tax, I shoulder that expense. I did find this:

http://www.chanrobles.com/legal6title18.htm#108

which begins

"NATIONAL INTERNAL REVENUE CODE OF 1997

Republic Act No. 8424

TITLE IV

VALUE-ADDED TAX

CHAPTER I

IMPOSITION OF TAX

SEC. 105. Persons Liable. - Any person who, in the course of trade or business, sells barters, exchanges, leases goods or properties, renders services, and any person who imports goods shall be subject to the value-added tax (VAT) imposed in Sections 106 to 108 of this Code."

 

It then goes on to talk about 5% withholding. But this is not a business, this is my residence, and the lawyer knows this.

 

Depending of where you live and some definitions of the property, but mostly it's around 1 % PER YEAR of the property VALUE, but because of the property value is much higher than the lease, in SOME cases it just HAPPEN it's similar as 5 % per month of the lease amount.

To WHERE do the lawyer say you need to pay?    

BIR

Perhaps he want 5 % in his OWN pocket...  :mocking:

Nothing would surprise me. This same lawyer, in preparing documents for an entirely different matter between me and my English-speaking filipina neighbor frequently carried on conversations in Tagalog with the neighbor, essentially talking behind my back, even though the English-speaking attorney was in my employ. Lawyer said they are more comfortable speaking in Tagalog . . . yeah, I bet they are, especially if she's working against me. In any other country based on law, that would constitute conflict of interest, but here . . .  not so much.

This appears to be an older thread with perhaps little traffic, would I be advised to start a new topic?

Edited March 5, 2015 by JonPalawan

[MikeB]

I split the related posts re: BIR into this new topic.

[Steve & Myrlita]

Perhaps he want 5 % in his OWN pocket... :mocking: Nothing would surprise me. This same lawyer, in preparing documents for an entirely different matter between me and my English-speaking filipina neighbor frequently carried on conversations in Tagalog with the neighbor, essentially talking behind my back, even though the English-speaking attorney was in my employ. Lawyer said they are more comfortable speaking in Tagalog . . . yeah, I bet they are, especially if she's working against me. In any other country based on law, that would constitute conflict of interest, but here . . . not so much. This appears to be an older thread with perhaps little traffic, would I be advised to start a new topic?

I smell a rat!

[Thomas]

I am paying the true owner of the property a lease amount every month.

(Except in real estate some DEAL the buyer pay the tax, and when importing) it's the RECIEVER the tax is demanded from =The person/company you pay TO.

But perhaps it's possible in Phils to make it as A PART OF A DEAL the payer HANDLE the tax paying for the land owner, but if so you can see it at the lease contract.   (=As a (part of) the lease fee, you pay the land owner's land property tax.)

IMPOSITION OF TAX SEC. 105. Persons Liable. - Any person who, in the course of trade or business, sells barters, exchanges, leases goods or properties, renders services, and any person who imports goods shall be subject to the value-added tax (VAT) imposed in Sections 106 to 108 of this Code." It then goes on to talk about 5% withholding. But this is not a business, this is my residence, and the lawyer knows this.

Yes. It's the person who lease to you who have the business, NOT you. 

 

A situation I can think of it can be CORECT is if VAT rules are CHANGED AFTER you made the lease contract. Then it's perhaps legal to demand compensation for that. STILL the normal is the payer pay to the land owner, and then the LAND OWNER pay to BIR, BUT because of many Filipinos try to skip to register and pay tax*  :) it can reduce risk for mess for YOU if you make sure the land Property tax is paid.  But - at least if the lease is registrered - it follow the LAND UNDEPENDING of who is owner, but it can be mess for you if the new owner don't want you there.

 

*  (I didn't notice how old the article was, but I did read yesterday it's demanded by BIR all the micro businesses as sarisaris and triclycles register and have registered book keeping, but almost no one had, so BIR told they will be much harder at that.)

Nothing would surprise me. This same lawyer, in preparing documents for an entirely different matter between me and my English-speaking filipina neighbor frequently carried on conversations in Tagalog with the neighbor, essentially talking behind my back, even though the English-speaking attorney was in my employ. Lawyer said they are more comfortable speaking in Tagalog . . . yeah, I bet they are, especially if she's working against me.

Yes. It wouldn't be the first time Filipino lawyers, who are paid by the FOREIGNER, take side with the FILIPINO...  :1 (103):

 

(See other topic about extreem honest Filipina. The Filipina thought only the small land was put in her name by the lawyer and the house in the foreigner's name, so she was supprised when she much later checked the signed contracts, noticing ALL was in her name! But she will send the money to the foreigner anyway.)