Tax exemption certificate, eCAR under Community Mortgage Program
Note that the Bureau of Internal Revenue may conduct a post-audit evaluation and verification on whether the raw land is actually covered under the Community Mortgage Program
The Bureau of Internal Revenue (BIR) has issued Revenue Memorandum Order 12-2017 to implement the guidelines in the issuance of Certificate of Tax Exemption (CTE) and electronic Certificate Authorizing Registration (eCar) for the transfers of raw lands to community/homeowners associations covered under the Community Mortgage Program (CMP) of Republic Act 7279, or the “Urban Development and Housing Act of 1992.”
CMP is a mortgage financing program of the National Home Mortgage Finance Corp. It helps legally organized associations of underprivileged and homeless citizens buy and develop land under the concept of community ownership. Properties sold under the CMP shall be exempt from capital gains tax or income tax, and consequently from the creditable withholding tax, whether sold by an individual, estate, trust or corporation.
To streamline the process, the application for CTE must be filed directly with the Office of the Commissioner. The documentary requirements to secure the CTE are the following: • Original certification signed by the president of the Social Housing Finance Corp. that the subject property qualifies and is actually a CMP project; • Certified true copy of the Deed of Sale executed by the landowner in favor of the community/ homeowners association; • Certified true copy of the master list of beneficiaries; • Certified true copy of the transfer/original certificate of title and latest tax declaration of the property; and • Extrajudicial settlement of the estate, in case the title is still in the name of a deceased landowner, and proof of payment of appropriate taxes.
Within five working days from the date of submission of the CTE, the Revenue District Office (RDO) concerned shall process, approve and issue the necessary eCAR. The CTE shall be a sufficient basis for the RDO to issue the eCAR. No other documents shall be required from the taxpayer/landowner.