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Author Topic: [Split post] Capital gains & loans for land  (Read 5277 times)

Offline Dave_Hounddriver

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[Split post] Capital gains & loans for land
« on: April 08, 2008, 10:32:33 PM »

Due to several costly divorces her in the USA , my credit in America is horrible, so I am a little worried about if i can borrow from the banks based on my past credit or can my income and savings be enough that i can swing a loan? I don\'t  wish and am not looking for a mansion,  but I am and must have some western amenities, I need air conditioning, i would love central air, but i realize that i way to cold for most of my family so i would settle for just ac in the master bedroom. I am torn between the usual cinder block construction and the newer style of building which entails pouring concrete between two steel frames with at least above 1/4 inch re bar for support. I know I will not settle for less than 15-18 blocks per bag of cement. I don\'t mind if I have to hire an architect to build the house , i have allready talked to one who has a great reputation in my home area, but is very expensive, his work is beautiful, but usually for Americans who have a much larger income than i> I am just in hopes than my savings can give me a up in making this dream come true.

Respectfully
Semper Fi
The \"murf\"
Pleased t\' meetcha, Murf,

I read, in your last post, a couple of areas where I feel qualified to comment.  First, with loans in the PI.  I know of a few people who loan out money in the PI at 4.9 % . . . . Per Month! . .  watch out because that compounds to a huge amount but it seems to be common in the PI. . . look carefully at some of the signs that advertise 1.5% interest and you will often see that they mean Per Week!.

Secondly, you wrote:  \".I am torn between the usual cinder block construction. . . \" The concrete cinder blocks used in PI need only be strong enough to support their own weight by code.  I believe that the ones who use ONLY cinder blocks are the poor and inexperienced builders.  You will see that many wise folk use a post and beam construction and only use the cinder blocks to fill in the empty spaces, probably because they are cheap.  Making your own concrete blocks is not necessary if you are only using them to fill space and keep in mind that the Filipinos build their own houses this way so they are experienced with this method.. . .

Hope I\'ve helped.  I enjoy reading your posts.

Dave
Show me the pinays!

Offline geno555

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Re: Capital gains & loans for land
« Reply #1 on: April 09, 2008, 03:35:13 AM »
Pleased t\' meetcha, Murf,

I read, in your last post, a couple of areas where I feel qualified to comment.  First, with loans in the PI.  I know of a few people who loan out money in the PI at 4.9 % . . . . Per Month! . .  watch out because that compounds to a huge amount but it seems to be common in the PI. . . look carefully at some of the signs that advertise 1.5% interest and you will often see that they mean Per Week!.

Secondly, you wrote:  \".I am torn between the usual cinder block construction. . . \" The concrete cinder blocks used in PI need only be strong enough to support their own weight by code.  I believe that the ones who use ONLY cinder blocks are the poor and inexperienced builders.  You will see that many wise folk use a post and beam construction and only use the cinder blocks to fill in the empty spaces, probably because they are cheap.  Making your own concrete blocks is not necessary if you are only using them to fill space and keep in mind that the Filipinos build their own houses this way so they are experienced with this method.. . .

Hope I\'ve helped.  I enjoy reading your posts.

Dave

Thank you Dave both for your financial insight and also the \"hollow block\" issue, I will be aware of both upon my return. Sad to say that I have allready made a mistake in the PI a couple of years ago by purchasing a small lot behind my mother-in-laws house with the intent of using it some day to build another small house on for one of my brothers who has a baby.He and his brother were going to supply all the labor and building for they have some high degree of skills in carpentry , even though we had a lawyer the sale ended up being now a real problem!! I have no learned from the original owner that all I have is a deed of sales and now she demands I pay 200,000 pesos in captain gain tax or she will reclaim the lot...s*** I only paid 90,000 pesos for the fudging lot? any of you all who have some knowledge out their on real estates issues please chime in, for I don\'t and will not allow my wife for she is the one of the deed of sale, to get into any trouble with the BIR, before that happens i will pay the government the 200,000 pesos but my wife is very upset and angry with this woman who she thinks \"hoodwinked\" us both for I was an American and she even though being college educated had no experience in buying property before. Damn i rather give up the lot if possible than to give the government another 200,000 pesos, gosh i paid 25,000 just to get the lot properly surveyed or thus I was told so they could come in there and put down four cement corner post on my lot that I had to pay and addition 1000 pesos a  piece for...any thoughts about my options  regarding this dilemma would be greatly received...I don\'t want to break any laws, but I also don\'t like being the \"latest\" monkey in the barrel.
Respectfully
Semper Fi
The \"Murf\"

Offline RUFUS

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Re: [Split post] Capital gains & loans for land
« Reply #2 on: April 09, 2008, 08:08:49 AM »
You hired a lawyer... what do they have to say about the situation...
I\'d be givin the lawyer a \"WTF\" phonecall about now to find out why he/she didn\'t catch it or tell you this could happen.
SO SAYETH THE RUFUS

Offline fred

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Re: [Split post] Capital gains & loans for land
« Reply #3 on: April 09, 2008, 10:44:21 AM »
Rufus..
Just wondering.. What is a WTF phonecall ?
Thanks,
Fred.

Offline RUFUS

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Re: [Split post] Capital gains & loans for land
« Reply #4 on: April 09, 2008, 10:48:34 AM »
LOL... sorry.
WHAT THE F***
SO SAYETH THE RUFUS

Offline Ted

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Re: [Split post] Capital gains & loans for land
« Reply #5 on: April 09, 2008, 02:06:03 PM »
Murf,

I’m not sure where to start on this one. If your wife has a Deed of Sale, then she has evidence of ownership. Did your wife pay property taxes to the municipality? That is more evidence of ownership.  Did your family take possession of the land? Did they fence it? Do you see where I’m going with this?

The old owner cannot “reclaim the land”.  She has to go to court (see article 433 below).

Here are some articles from the Civil Code of the Philippines regarding ownership:

Art. 429. The owner or lawful possessor of a thing has the right to exclude any person from the enjoyment and disposal thereof. For this purpose, he may use such force as may be reasonably necessary to repel or prevent an actual or threatened unlawful physical invasion or usurpation of his property.

Art. 430. Every owner may enclose or fence his land…

Art. 433. Actual possession under claim of ownership raises disputable presumption of ownership. The true owner must resort to judicial process for the recovery of the property.

Does your wife’s family exclude other people from the land? Did they fence it or occupy it? Did they plant on it? All of these things are evidence of  “actual possession” (article 433).

Imagine if the RP lived by rules where someone could demand payment or they will “reclaim their land”.  It would happen every day. Simply put, the RP is a nation of laws and of due process. Trust this system.  If everyone could bluff their way into 150 or 200 thousand pesos life would be easy for the locals.

If your wife really bought the land, in a small town then everybody in town knows that. There are no secrets in the provinces, at least not for long.  So if she bought it and paid for it, then leave it to the old owner to take you to court. Don’t be pressured by this.  Everyone knows you own it… right?

Did you agree in writing to pay the capital gains tax?  It is the custom in certain provinces to pay this tax (or at least to get a foreigner to pay it). But do you think that a tax would be more than the cost of the land? This is a scam. Capital gains is a tax on a gain. Did you have a gain?  No, the seller did! She pays the tax!

How did you learn of the tax? You said “but now find out that I owe a capital gain tax in the amount of 150,000 pesos”… how did you find out? Did one of your wife’s’ relatives tell you that?  Were you served with a subpoena? (no, because you are in the states.)  Later you said “give the government another 200,000”.  It is confusing to have two numbers out there so please be exact. What is the real number and how do you know? It is more likely 12k or less - and not your problem.

There is not enough information here to figure this out. One thing is for sure, if you surveyed, paid, got a deed of sale, had a lawyer, and paid the property tax at the municipality and fenced or occupied the land then it is up to the old owner to take YOU to court. Your wife and her lawyer will have no problem proving ownership at the hearing or in court.

That will be fifty centavos.

Fish

Offline RUFUS

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Re: [Split post] Capital gains & loans for land
« Reply #6 on: April 09, 2008, 09:50:52 PM »
LOL...
Gotta love this guy...
I\'m definitely inviting the Fish family to my next roast pig and Red Horse bash...
Obviously a brain worth picking.. always knowledgeable words of wisdom
SO SAYETH THE RUFUS

Offline geno555

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Re: [Split post] Capital gains & loans for land
« Reply #7 on: April 10, 2008, 04:06:06 AM »

4/9/2008 3:10:29 PM
Fish thank you so much for your reply to my dilemma. Let me help clarify some of my misinformation I gave the group. In 2004 when I first went to The Philippines to marry my wife, we lived with her mother in her Home. My wife is one of 9 siblings and her father passed away in 2002. Leaving his wife with just a small pension from his work in the forestry industry. The house they lived in for at least close to 30 some years now was built by my father-in-law and his friends. The property was given to him by his boss in the forest industry, thus he did not actually have a deed or anything, except the promise of his friend he could live and build on it as long as he wished. After his death that all changed, his wife a Mrs. Tan, came to my mother and said she wanted 40,000 pesos for the property, my mother told her she did not have that kind of money but would borrow it, Mrs. Tan returned the next day saying her lawyer daughter in new York said 40,000 was not enough now demanded 60,000 my mother said she simply did not have it and gave Mrs. Tan the 40,000 pesos which she accepted. But my mother being an uneducated person did get a deed of sale but Mrs. Tan had 3 daughters two living in the Philippines the other the lawyer living in New York City. She did finally did use a lawyer but failed to get the one daughter in New York to sign off on the deed for she said she was the heir of that property. The property was actually two 300 by 300 lots adjoin each other and my mother on had a deed of sale on the front parcel of 300 by 300 where the house stood. When I arrived there after several months, I became uncomfortable than the back 300 parcel which her family was using to grow pigs, chickens and so forth would one day be taken by Mrs. Tang so I asked my wife if I could call her and purchase the back lot. When I called her she said at first she was not interested and I said thank you. The next day she called me back and said she had spoken with her daughters and it was ok with them if she sold it. The asking price was 120,000 pesos, I countered with 80,000 pesos and she hung up. Two days later she called me stating she had talked to her daughters again and they would go as low as 100,000 pesos, I countered with 90,000 pesos and she said ok. Within two weeks I had her come to my lawyers office where a deed of sale was drawn up but my attorney asked her that he needed a notarized authorization from all of her daughters releasing any future claims to the stated property and she said she did not feel comfortable with that for she had already told her daughters she was coming to my lawyers that day and they expected her to come back with the 90,000. After some very intense talk between my attorney and here she left and I figured the deal was over. My lawyer said, don’t worry she just wants to get paid today, but she is going home to get her daughters position. So I went home and waited. Within a week my lawyer called me to come to his office with my mother and my wife to close, as I can no own property in the Philippines so my intentions were to have two deeds of sale one in my mother’s name for the first 300 parcel lot one to my wife to own the back 300 parcel lot.
Upon Mrs. Tan’s arrival at the lawyers office everything was going fine I thought until the lawyer said he was missing the authorization from the one daughter lawyer in New York. Mrs. Tan told the lawyer we didn’t need to worry about that daughter for she was a successful lawyer with a lucrative business in the middle of Manhattan. My Lawyer said well mam, I am sorry but without all three of your daughters signing off as heirs of this property the sale cannot go forward. She angrily left the office again, I assumed the deal had crashed and burned but 8 days later my lawyer called me back saying he had received a overnight fed X letter of authorization from the daughter from New York, he told me at that time, I find it strange that this very successful lawyer had to go to another attorney to get the paper authorized and notarized , why did she not just do it herself?? Back again next week to the lawyer’s office where I left with two signed and notarized deeds of sale for the property one in my mother’s name one in my wife name. There was never at that time talk of a capital gain tax. So it thought it was over. I immediately had the whole both lots surveyed had the four corner post put in and got the official survey back only after I sent one of my brother-in-laws who is known for his ability to move along the bureaucratic red   tape that is so prevalent in the PI
Last weekend during my wife’s weekly visit on the internet with her mother and other siblings it came out that Mrs. Tan had been to the house demanded that she pay 200,000 pesos she and my wife owned for capital gain tax, both my wife and mother were visibly shaken, me I was just dammed pissed. I know nothing of Philippine Real Estate Law but I do know of many people living in my neighborhoods who have told me they have never paid capital gain tax on their homes just a monthly or yearly tax to the local municipality. Also I find it hard to believe that there is a tax any tax of 200,000 pesos on a 90,000 peso purchase, my God no one could every afford to buy property in the Philippines.
Thus that’s my story and I’m sticking to it. I have told my mother and wife wait until we return in October but my mother is very nervous that she is breaking some law, my wife is a lot more realistic and assures me that no one can come and kick her mother off that property and make her homeless. That’s why I wrote you guys on here for your help which I appreciate so much more than you can imagine.

Best wishes to all of you and Yours
Semper Fi
The “Murf”
LOL...
Gotta love this guy...
I\'m definitely inviting the Fish family to my next roast pig and Red Horse bash...
Obviously a brain worth picking.. always knowledgeable words of wisdom

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Re: [Split post] Capital gains & loans for land
« Reply #8 on: April 10, 2008, 07:56:06 AM »
Murf,

Some info to perhaps help out here. First of all, the paperwork side of this. You need the following:


Copied from http://www.philippine-embassy.org.sg/index.cfm?GPID=110

REQUIREMENTS FOR LAND TRANSFER OR TRANSFER CERTIFICATE OF TITLE

The following documents are required for the filing of land transfer:

   1. Copies of the Deed of Absolute Sale
   2. Latest real estate tax payments
   3. Latest tax declaration of the property
   4. Certificate from the Bureau of Internal Revenue that the capital gains tax and documentary stamps have been paid
   5. Transfer tax
   6. Receipt of payment of the transfer and registration fees

So it seems that without paying the Capital Gains, you are not going to get this transfer completed.

Now this from
http://realestate.cebunetwork.com/15/taxes-on-real-estate-transactions/


The usual agreement in the sale and purchase of properties in the Philippines is that the seller takes care of the capital gains tax or creditable withholding tax while the buyer pays for the DST and transfer tax.

The good news all round though is (from the same site) the tax is 6%

The applicable tax in the sale of capital assets is the capital gains tax. The tax rate is 6 percent of either the “price per deed of sale” or “zonal value” in case of land.

So if you want to put this to bed, maybe you should consider cutting out the \'Wife\' & getting the docs sorted yourself & paying the capital gains by going to the BIR direct.

No matter how you look at this though, P200,000 is a con.


FISH As our resident \'Legal & Property\' expert  ;D can you look at the above link as there is more info & I am no expert here.

Offline Ted

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Re: [Split post] Capital gains & loans for land
« Reply #9 on: April 10, 2008, 12:27:42 PM »
Murf,

I’m not an expert. This case spans inheritance law, tax law and real estate law. You couldn’t have created a better bar exam question.  I’m going to take a stab at this anyway.  Keith’s post above is great and looks good if you want to get a title.  Most properties never get a title because of various complications, especially in the province. So here are the issues one by one:

The first issue is the capital gains tax.

“Capital Gains Tax is a tax imposed on the gains presumed to have been realized by the SELLER from the sale, exchange, or other disposition of capital assets located in the Philippines…” (from the BIR Website http://www.bir.gov.ph/taxinfo/tax_capgin.htm )

The seller is expected to pay the tax unless there was another agreement. The BIR (if they ever wake up to this) will go after the seller. Mrs. Tan cannot sue you for capital gains tax. Not ever. End of tax story!

The second issue is if the daughters have a right to claim the property as an heir. Sticky legal question. But, since they ALL SIGNED OFF on the deed of sale they can’t claim inheritance. End of inheritance claim.

Next question is - who owns the lots? Since your wife has Deeds of Sale and the daughters signed off, and you surveyed it, put markers on it and mom has lived there for 30 years and dad built the house... you don’t have anything to worry about.  I assume you are paying the property tax to the municipality. A few dollars a year at the most. Your name should be on the tax record. They own it, posses it and control it. End of ownership issue. You may not have a title but that is normal in the province. 

Now the threat that “she will reclaim the lot” if she is not paid. There is no way that she can do this. Remember Article 433 of the Civil Code? “Actual possession under claim of ownership raises disputable presumption of ownership. The true owner must resort to judicial process for the recovery of the property.” Mrs. Tan has to go to court to get the land back. She can’t do this because she has no “cause of action”. In the law, a cause of action (sometimes called a claim) is a set of facts sufficient to justify a right to sue. If she or her family tries to take it back, see article 429 (and call the police).  You have a Deed of Sale. It is almost impossible to challenge.

As for a title, if you feel you want one, handle it when you get there. You’ll have all the time in the world to sort out that level of detail. You’ll need it.

There is another aspect of this and it has little to do with law. It is strategy. How do we stop Mrs. Tan from being a pain? There are a variety of options.

First, ask for her demand in writing, and include her lawyer daughter’s name in the demand. Once you get it, threaten to call the BIR, sue her for fraud and threaten to have that fancy New York lawyer debarred for fraud. Send the lawyer a letter and copy the New York State Bar Association. Show the letter around town. Post copies of it. That might shut this down pretty fast. (Unlikely she will put this scam in writing.)

Second, ignore it. Laugh at them. Show them a print out of the BIR website and explain that she is stupid.  Challenge her publicly to sue. Time is on your side. Everyone know\'s it is a scam and Mrs. Tan will let go.

Third, take this to the barangay captain.  Do this if you know for a fact that he is impartial and understands the law. Maybe Mrs. Tan just need the facts explained to her. Maybe they are just confused.  Maybe they need to understand that the scam is over.

There are lots of strategies. Find one that you are comfortable with and can live with.
The law is on your side. Mrs. Tan is on thin ice.

That will be fifty centavos.

Fish

Offline coutts00

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Re: [Split post] Capital gains & loans for land
« Reply #10 on: April 10, 2008, 01:20:05 PM »
Hey fish, by my current count you are owed 1 peso for these posts will you be suing in court for the full amount or should we contact the BIR and have them tax you on it, also are you going to present an invoice for the 1 peso charges for your legal advice?

Wayne
Wayne  ;D ;D

Offline Manila Cockney

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Re: [Split post] Capital gains & loans for land
« Reply #11 on: April 10, 2008, 02:41:33 PM »
The seller of the property is responsible to pay the Capital Gains Tax.     Tax is paid on the higher of the sale price or zonal value. It is not paid on the gain and is even paid if you make a loss. It is not a Capital Gains Tax at all.  If buying a a property, you cannot register it until all taxes are paid.   Filing should be done within 30 days. There are some exceptions especially if going to use the proceeds to construct or aquire new principal residence.  This gives you all the details

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

When buying a property where CGT is to be paid,  the tax should be deducted from the sales price and a bankers draft made out to the BIR for the tax amount. Another Bankers draft given to the seller for purchase price being sale price less CGT. This is to protect yourself that the tax will be paid enanling you to register the title in your name. 

Offline Ted

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Re: [Split post] Capital gains & loans for land
« Reply #12 on: April 10, 2008, 10:10:33 PM »
Central point that I got here is not so much the tax.  Rather it’s “What do we do when Mrs. Tan shows up demanding money and threatening us?”  We really don’t know if she already paid the tax. We don’t know if her daughter is really a lawyer. We just want Mrs. Tan to leave us alone.

If we pay Mrs. Tan (again), she and everyone in town will never leave us alone.

How Mrs. Tan is handled will set the tone for the rest of your life. It establishes the Kano’s reputation. I had a Mrs. Tan and we handled her quite nicely. Now life is peaceful.  You will probably never meet Mrs. Tan. She usually comes out when you buy property. But she is out there and she has to be put in her place in an appropriate manner.

Deal with the registration when you get there. Or directly, without Mrs. Tan’s \"help\".