BIR exempts residential properties below ₱3.6 M from 12% VAT

The Bureau of Internal Revenue (BIR) has increased the threshold for value-added tax (VAT) exemption on the sale of residential properties.

In a statement, BIR Commissioner Romeo Lumagui Jr. said on Wednesday, Jan. 17, that house and lots, as well as other residential properties priced at ₱3.6 million and below will be exempt from the 12-percent VAT.

Lumagui’s announcement follows the issuance of Revenue Regulations No. 1-2024 by the BIR, which raised the exemption threshold from ₱3.199 million.

The new BIR regulations increased, “for VAT exemption purposes, the selling price threshold of the sale of house and lot, and other residential dwelling from ₱3,199,200 to ₱3,600,000.00.”

Lumagui explained that the adjustment was made in accordance with Section 109 (P) of the National Internal Revenue Code, which requires the threshold to be updated every three years using the Consumer Price Index of the Philippine Statistics Authority.

“This timely increase in VAT exemption shows our commitment to Excellent Taxpayer Service,” Lumagui said. “This increase in the selling price threshold, for VAT exemption purposes, of the sale of house and lot, and other residential dwelling from ₱3,199,200 to ₱3,600,000 gives testament to the BIR’S improved and updated services.”

Additionally, Lumagui said the BIR is committed to prioritize Excellent Taxpayer Service in 2024.

He emphasized that the recently enacted Ease of Paying Taxes Act is a significant milestone toward establishing a more modern tax system, ultimately aiming to aid taxpayers in fulfilling their tax obligations.