Article No. 295-Declaration of Real Property by the City Assessor
This is self-explanatory provision. The City Assessor, with no way of knowing the real owner of the property, will simply declare it in the name of John Does. Mr. X , etc. There is no oath required for the purpose of declaring this property by the City Assessor. Since the property owner is not known, collection of taxes are still suspended. However, when the owner is located, the last centavo will be collected from him, including penalties of two percent per month.
As in some cases, there is a situation when new owners who are too busy to go to the Assessor's Office or just simply ignore the notices sent by the office. Within the reglamentary period, the proper owner fails to exercise his right, the tax due from the property thereon becomes his annual obligation payable to the government.
Article NO. 296 Listing of Real Property in the Assessment Rolls.
Assessment Roll is a government Form used in the Assessor's Office where the list of all taxable and exempt properties are shown. This may include some informations as owner, the address and the tax due during the year., etc....
Article No. 297 Proof of Exemption from Taxation.
It is the property owner who will show the burden of proof that his property is not subject to tax. If he fails to convince the authority about the exemption, his property will be listed as those being taxable. In the event that the owner can finally show that the property indeed is exempted, that proeprty becomes exempted and is now listed as "Tax Exempt" in the Assessment Rolls.
Article NO 298 Real Property Identification System
There is a system prescribed by the BLGF regarding the administration of Real Properties. However, the City Assessor can make his own way, for as long as the system so employed is acceptable by the Department of Finance.
Article No. 299 Notification of Transfer of Real Property Ownership
When it shall be made- As a rule, the transfer must be made within 60 days;
Where-To the nearest Assessor's office of the place where the property is located; (not residence of the owner.)
Article No. 300 Duty of the Register of Deeds to Apprise the Local Asessor of Real Property LISTED IN THE REGISTRY.
There is an existing agreement with the Assessor and the Registrar regarding this provision. This is one way of monitoring where the Assessor is given access to information of properties already in the new oners during the month/year.
Monday, August 24, 2009
Thursday, August 20, 2009
Article No. 293 Who will declare Real Property and when
Article No. 291-Administration of Real Property Tax(self explanatory)
Article No. 292-Appraisal of Real Property (self-explanatory)
Article No. 293-Declaration of Real Property by the Owner
Article No. 294-Duty of the Person Acquiring Real Property or Making Improvements
All person natural or juridical or his duly authorized representative.
Where-to the City/Provincial or Municipal Assessor
If land- bring xerox copy of the title
If building, bring the following, building permit, certificate of completion or occupancy, building plans and bill of materials
When-60 days
How is 60 days reckoned with:
If building, 60 days after completion or occupation
If land-60 days after the notarial date
If newly constructed building or improvements- 60 days upon completion or occupancy.
If machinery-60 days after installation
Article No. 292-Appraisal of Real Property (self-explanatory)
Article No. 293-Declaration of Real Property by the Owner
Article No. 294-Duty of the Person Acquiring Real Property or Making Improvements
All person natural or juridical or his duly authorized representative.
Where-to the City/Provincial or Municipal Assessor
If land- bring xerox copy of the title
If building, bring the following, building permit, certificate of completion or occupancy, building plans and bill of materials
When-60 days
How is 60 days reckoned with:
If building, 60 days after completion or occupation
If land-60 days after the notarial date
If newly constructed building or improvements- 60 days upon completion or occupancy.
If machinery-60 days after installation
Tuesday, August 18, 2009
Article No. 290-Words and Phrases Commonly Used in Appraisal and Assessments
Article No. 290 Definition of Terms
(With Illustrative Example)
1. Actual Use-refers to the very purposes to which the property is principally used.
The building was intended for an apartment store-therefore it was originally commercial as planned. But the owner have it rented by students as it was near a school buildings. The actual use for taxation purposes is therefore residential.
2. Ad valoren-the levy on the property which can be determined on the basis of a fixed proportion of the value of the property.
Market Value of the residential property building= Php 4,000,000
Assessed Value Php 4,00,000 x 40% = Php 1,600,000
Advalorem tax (Real property tax) = Php 1,600,000 x .025 or Php 40,000
3.Agricultural land-devoted to agricultural used.(self explanatory)
4. Appraisal-the process of determining the value of the property as to the specific date for a specific purpose.
Juan dela Cruz, a Real Estate property Appraiser. He was commissioned to appraise a 1,000 sqm commercial property along San Pedro Street, Davao City. He determined it to be Php 40,000,000 as of his appraisal date. His appraisal report was dated August 12, 2009 and this is intended to be used as a requirement for a loan with PNB. The act of assigning new value to the property is appraisal
5. Assessment-determination of the value of the property or portion thereof subject of tax, including discovery listing, classification and appraisal of the property.
In assessment there is a distinction. In the preceding, let us assume Juan dela Cruz is a real property appraiser of the City Assessor's Office of Davao City.If the value of the commercial property per illustration above is Php 40,000,000 and the assessment level for land is 50%, then the assessed value of that property is Php 25,000.000. To complete the assessment process, the tax declaration produced as a result of the above assessmentis brought to the City Treasurer for realty tax computation and the taxpayer psys the tax of Php 625,000 (Php 25,000,000 x .025 tax rate) for Davao City).
To complete the meaning per Article No. 288, let us include levy. The City Treasurer is clothe with the authority to attach the delinquent property. This is a process resorted by the Treasurer propert only when there is a deliberate intent of the property owners not to pay what is due the government. This is done only after due process is afforded to the real proerty owner.On levy the tax declaration is marked " Under Levy" withthe total t ax unpaid indicated on the face of the tax declaration. Summing it all, these complete the definition of No. 5.
6. Assessment level-percentage applied to the market value of the property to arrive at the taxable value of the property.
At first the law provides for the assessment level. In the implementing rule, the respective sanggunians are clothe with the authority to fix it.
7. Assessed Value of the property-Amount arrived at by multiplying the market value of the property by the assessment level.
Using the illustration above the assessed value is Php 25,000,000
8. Commercial land-devoted to commercial use( self-explanatory)
9. Depreciated Value-Original cost less accumulated depreciation.
If the original cost of a machine is Php 500,000
Life of the asset 10 years. Allowing a 10 percent depreciation on the asset will give you a total accumulated depreciation of Php 450,000 on the ninth year. Therefore the depreciated value is computed as follows:
ORIGINAL COST Php 500,000
Total Accumulated Depreciation 450,000
Depreciated Value of the Asset Php 50,000
10.Economic life-Estimated life of the asset.
The period of the first year that the equipment was used until the last year of its economic life.
11.Fair Market Value-the price at which property maybe sold by a seller who is not compelled to sell and a buyer who is not compelled to buy.
Simple example of a fair market value of the property can be
determined as follows:
Juan dela Cruz has a property he wanted to sell at Php 600,000
But just recently, a property nearby with the same size was sold for Php 400,000. The fair market value should be Php within the vicinity of Php 500,000.
Another example:
Rental of the building is PHP 40,000
Annual Rental Php 40,000 x 12 months sor Php 480,000
Less-Operating expenses 10% 48,000
Net Income for the year Php 432,000
IF the accepted rate of return is say 8% per annum, then the estimated cost of the building can be computed as follows:
Php 432,000 / .08 or Php 5,400,000.00
12.Improvements-Any addition to the property, that is intended to enhance its value, beauty or utility. This is not only a mere repair or the replacements of parts that involves capital expenditures as this kinds will tend to even lengthen the life of the asset.
13. Industrial land-land devoted to industrial use.( self-explanatory)
14. Machineries- embraces machines and equipment, mechanical contrivances, instruments, appliances or apparatus attached or may not be attached to the land. This has a very broad meaning(Kindy refer to the provision of the law.(self-explanatory)
15. Mineral lands-land devoted to minerals, metallic or non-metallic, etc.(self-explanatory)
16. Reassessment-The assignment of new values to the property. This is usually done during general revisions of properties in the local government unit. This general revision of proerty comes once in every three years.
Illustration
In the last general revision of a 1,000 square meters was valued at Php 1,000,per sqm or a market value of Php 1,000,000
Three years after, which is again a general revision year based on the mandate of the law, the same property was valued now as Php 2,000 per sqm or a market value of Php 2,000,000. The act of assigning value of a property on the basis of what is provided for by law is reassessment. Reassessment can also be effected if in the discretion of the appraiser his decision was made to correct what he believe is in accordance with assessment law. However as in the case of the Assessor's deliberate intent to overstate the value of the proerty and then have it lowered for a reconsideration, be it in cash or in kind is highly anomalies. ONCE THE PROPERTY HAS BEEN SIGNED AND ISSUED BY THE CITY ASSESSOR HE losses his right to change it. the changing of values is already in the hands of the Local Board of Assessment Appeal. Allowing a correction for such kind of transactions by the very person who assessed it will invite an open door for them to commit wrongdoings.
17. Remaining economic life-expressed in years, it is the period from the time of reappraisal until the time the property becomes useless.
If the property has an economic life of 10 years as in the above example and it was reassessed on the ninth year, the period from January 1 to December 31, which constitute one year period is the remaining economic life of the asset.
18.Replacement or reproduction cost-That kind of cost that could have been incurred on the basis of the current price in acquiring an equally desirable property.
Abbreviations used in arriving "reproduction cost"
OC= Original Cost of an imported machinery Php 5,370,000
EL= Economic Life of the asset is 50 years
N= Number of years the machine is in used=10 years
D1= Dollars Exchange rate at the time of acquisition Php 44.00
D2= Dollar exchange rate at the time of appraisal Php 46.00
There is a formula to arrive at a reproduction cos, thus:
RCNLD=OC x D2 x REL-N/D1 x EL
Applying the formula and the information given
Where:
RCNLD=Reconstruction Cost new less Depreciation
RCNLD=Original Cost (Php 5,370.00 x 46 x 40/ 44 x 50 or Php 4,491,270.00
19. Residential land-devoted to habitation purposes. (self-explanatory)
(With Illustrative Example)
1. Actual Use-refers to the very purposes to which the property is principally used.
The building was intended for an apartment store-therefore it was originally commercial as planned. But the owner have it rented by students as it was near a school buildings. The actual use for taxation purposes is therefore residential.
2. Ad valoren-the levy on the property which can be determined on the basis of a fixed proportion of the value of the property.
Market Value of the residential property building= Php 4,000,000
Assessed Value Php 4,00,000 x 40% = Php 1,600,000
Advalorem tax (Real property tax) = Php 1,600,000 x .025 or Php 40,000
3.Agricultural land-devoted to agricultural used.(self explanatory)
4. Appraisal-the process of determining the value of the property as to the specific date for a specific purpose.
Juan dela Cruz, a Real Estate property Appraiser. He was commissioned to appraise a 1,000 sqm commercial property along San Pedro Street, Davao City. He determined it to be Php 40,000,000 as of his appraisal date. His appraisal report was dated August 12, 2009 and this is intended to be used as a requirement for a loan with PNB. The act of assigning new value to the property is appraisal
5. Assessment-determination of the value of the property or portion thereof subject of tax, including discovery listing, classification and appraisal of the property.
In assessment there is a distinction. In the preceding, let us assume Juan dela Cruz is a real property appraiser of the City Assessor's Office of Davao City.If the value of the commercial property per illustration above is Php 40,000,000 and the assessment level for land is 50%, then the assessed value of that property is Php 25,000.000. To complete the assessment process, the tax declaration produced as a result of the above assessmentis brought to the City Treasurer for realty tax computation and the taxpayer psys the tax of Php 625,000 (Php 25,000,000 x .025 tax rate) for Davao City).
To complete the meaning per Article No. 288, let us include levy. The City Treasurer is clothe with the authority to attach the delinquent property. This is a process resorted by the Treasurer propert only when there is a deliberate intent of the property owners not to pay what is due the government. This is done only after due process is afforded to the real proerty owner.On levy the tax declaration is marked " Under Levy" withthe total t ax unpaid indicated on the face of the tax declaration. Summing it all, these complete the definition of No. 5.
6. Assessment level-percentage applied to the market value of the property to arrive at the taxable value of the property.
At first the law provides for the assessment level. In the implementing rule, the respective sanggunians are clothe with the authority to fix it.
7. Assessed Value of the property-Amount arrived at by multiplying the market value of the property by the assessment level.
Using the illustration above the assessed value is Php 25,000,000
8. Commercial land-devoted to commercial use( self-explanatory)
9. Depreciated Value-Original cost less accumulated depreciation.
If the original cost of a machine is Php 500,000
Life of the asset 10 years. Allowing a 10 percent depreciation on the asset will give you a total accumulated depreciation of Php 450,000 on the ninth year. Therefore the depreciated value is computed as follows:
ORIGINAL COST Php 500,000
Total Accumulated Depreciation 450,000
Depreciated Value of the Asset Php 50,000
10.Economic life-Estimated life of the asset.
The period of the first year that the equipment was used until the last year of its economic life.
11.Fair Market Value-the price at which property maybe sold by a seller who is not compelled to sell and a buyer who is not compelled to buy.
Simple example of a fair market value of the property can be
determined as follows:
Juan dela Cruz has a property he wanted to sell at Php 600,000
But just recently, a property nearby with the same size was sold for Php 400,000. The fair market value should be Php within the vicinity of Php 500,000.
Another example:
Rental of the building is PHP 40,000
Annual Rental Php 40,000 x 12 months sor Php 480,000
Less-Operating expenses 10% 48,000
Net Income for the year Php 432,000
IF the accepted rate of return is say 8% per annum, then the estimated cost of the building can be computed as follows:
Php 432,000 / .08 or Php 5,400,000.00
12.Improvements-Any addition to the property, that is intended to enhance its value, beauty or utility. This is not only a mere repair or the replacements of parts that involves capital expenditures as this kinds will tend to even lengthen the life of the asset.
13. Industrial land-land devoted to industrial use.( self-explanatory)
14. Machineries- embraces machines and equipment, mechanical contrivances, instruments, appliances or apparatus attached or may not be attached to the land. This has a very broad meaning(Kindy refer to the provision of the law.(self-explanatory)
15. Mineral lands-land devoted to minerals, metallic or non-metallic, etc.(self-explanatory)
16. Reassessment-The assignment of new values to the property. This is usually done during general revisions of properties in the local government unit. This general revision of proerty comes once in every three years.
Illustration
In the last general revision of a 1,000 square meters was valued at Php 1,000,per sqm or a market value of Php 1,000,000
Three years after, which is again a general revision year based on the mandate of the law, the same property was valued now as Php 2,000 per sqm or a market value of Php 2,000,000. The act of assigning value of a property on the basis of what is provided for by law is reassessment. Reassessment can also be effected if in the discretion of the appraiser his decision was made to correct what he believe is in accordance with assessment law. However as in the case of the Assessor's deliberate intent to overstate the value of the proerty and then have it lowered for a reconsideration, be it in cash or in kind is highly anomalies. ONCE THE PROPERTY HAS BEEN SIGNED AND ISSUED BY THE CITY ASSESSOR HE losses his right to change it. the changing of values is already in the hands of the Local Board of Assessment Appeal. Allowing a correction for such kind of transactions by the very person who assessed it will invite an open door for them to commit wrongdoings.
17. Remaining economic life-expressed in years, it is the period from the time of reappraisal until the time the property becomes useless.
If the property has an economic life of 10 years as in the above example and it was reassessed on the ninth year, the period from January 1 to December 31, which constitute one year period is the remaining economic life of the asset.
18.Replacement or reproduction cost-That kind of cost that could have been incurred on the basis of the current price in acquiring an equally desirable property.
Abbreviations used in arriving "reproduction cost"
OC= Original Cost of an imported machinery Php 5,370,000
EL= Economic Life of the asset is 50 years
N= Number of years the machine is in used=10 years
D1= Dollars Exchange rate at the time of acquisition Php 44.00
D2= Dollar exchange rate at the time of appraisal Php 46.00
There is a formula to arrive at a reproduction cos, thus:
RCNLD=OC x D2 x REL-N/D1 x EL
Applying the formula and the information given
Where:
RCNLD=Reconstruction Cost new less Depreciation
RCNLD=Original Cost (Php 5,370.00 x 46 x 40/ 44 x 50 or Php 4,491,270.00
19. Residential land-devoted to habitation purposes. (self-explanatory)
Article No.289-Four Fundamental Principles of Real Property Valuation
Since property, for the purpose of real property taxation are to be valued fairly whoever uses it and wherever it is located, the government had set down rules. the following are:
IMPLEMENTING RULES AND REGULATION OF RA NO. 7160 OTHERWISE KNOWN AS THE LOCAL GOVERNMENT CODE OF 1991
Article 288-Scope- covering the administration, appraisal, assessment, level and collection of real property taxes.
Article No. 289- The Four Fundamental Principles
1. Real property shall be appraised at its current and fair market value;
2.Real property shall be classified for assessment purposes on the basis of actual use;
3. Real property shall be assessed on the basis of a uniform classifications with each local government unit;
4. The appraisal, levy and collection of real properties shall not be let to any private person;
5. The appraisal and assessment of real property shall be equitable.
IMPLEMENTING RULES AND REGULATION OF RA NO. 7160 OTHERWISE KNOWN AS THE LOCAL GOVERNMENT CODE OF 1991
Article 288-Scope- covering the administration, appraisal, assessment, level and collection of real property taxes.
Article No. 289- The Four Fundamental Principles
1. Real property shall be appraised at its current and fair market value;
2.Real property shall be classified for assessment purposes on the basis of actual use;
3. Real property shall be assessed on the basis of a uniform classifications with each local government unit;
4. The appraisal, levy and collection of real properties shall not be let to any private person;
5. The appraisal and assessment of real property shall be equitable.
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