Rise in realty zonal value ‘long overdue’

LAWYER Aynie E. Mandajoyan-Dizon (right), Bureau of Internal Revenue (BIR)-13 regional director and Noel Añover, BIR-13 Excise Tax Area 3 officer, in an interview on Jan. 9, 2018 on the plan to increase by at least three-fold the zonal value of real properties in Cebu.
CDN PHOTO/CHRISTIAN MANINGO

City treasurers in Cebu welcomed the move of the Bureau of Internal Revenue (BIR)-13 to increase the zonal values for real estate properties within the province.

In fact, it should have been done a long time ago, according to Mandaue City Treasurer Regal Oliva.

“The increase of zonal valuation is long overdue. For so long a time, buyers or sellers or heirs of properties have not been truthful to the actual amount or value of the property just to avoid taxes,” he told Cebu Daily News on Wednesday.

“This process has prejudiced the government from (getting the correct) revenues,” Oliva added.

The last time that BIR- 13 revised its zonal value for properties in Cebu was 12 years ago. BIR-13 has jurisdiction over all local government units in Cebu and Bohol.

According to BIR-13 Regional Director Aynie Mandajoyan-Dizon, their proposed increase in zonal valuation averages at around 300 percent higher than the current rates.

Property revaluation in some areas may be twice as much or even five times as much, depending on the property’s classification as well as its actual location, Mandajoyan-Dizon added.

The proposal, which already underwent several public hearings and consultations last year, is currently in the office of BIR Commissioner Cesar Dulay for approval. Once approved, this will be forwarded to the secretary of the Department of Finance (DOF) for final approval before publication.

“Since this is one of the major thrusts of the present administration, we expect this to be approved immediately,” Mandajoyan-Dizon said.

They expect the new rates to be implemented within the first quarter of 2018.

Newly appointed Cebu City Treasurer Veronical Morelos also saw the positive impact of the BIR’s revision of zonal values.

“I think the LGUs can benefit from this as far as revenue generation is concerned,” she told CDN.

According to Mandajoyan-Dizon, the revision of the zonal valuation would help the bureau cope with revenue collection losses due to the new Tax Reform for Acceleration and Inclusion (Train) Law, with the expected drop in income tax revenue, particularly with the tax exemption given to workers with an annual salary of P250,000 and below.

With the higher zonal value of properties, the BIR will be able to collect more capital gains tax (CGT) and documentary tax from one time transactions or sales of properties.

The BIR collects CGT equivalent to six percent of the zonal value or selling price, whichever is higher, of a property being sold. Another 1.5 percent of the property’s value is collected as documentary stamp tax.

According to Oliva, increased tax collections by the BIR would also mean increased collection of some taxes of LGUs where the properties being sold are located.

“This benefits LGUs in terms of the payment of transfer tax as these are based on the zonal valuation made by the BIR or the assessment made by the assessor or the actual consideration, whichever is higher,” Oliva said.

Local government units get transfer tax equivalent to one-half of one percent of the zonal value or assessment of the property within their jurisdiction that is being sold.