Sale of real properties in the course of trade or business

Sale of real properties in the course of trade or business

  1. On installment plan (initial payments do not exceed 25% of the gross selling price). If the VAT base is the gross selling price, which is higher than the zonal or market value, the output VAT shall be computed as follows:
Installments received   xxx
Add:    
Interest xxx  
Other charges xxx xxx
Tax base   xxx
VAT rate   12%
Output VAT   xxx

On the otherhand, if the VAT base is the zonal or market value which is higher than the gross selling price, the output VAT on every installment payment shall be:

 

       Actual collection (w/o VAT) xx the 12% VAT based on the

higher zonal or market value

Gross selling price

 

  1. On cash basis or deferred payment plan (initial payments exceed 25% of the gross selling price). The VAT base shall be the higher between the GROSS selling price stated in the sales document and the zonal or market value.

Notes:

  1. If the gross selling price is the zonal or market value of the real property, the zonal or market value shall be deemed exclusive of the VAT.
  2. If the VAT is not billed separately, the selling price stated in the sales document shall be deemed inclusive of the VAT.

Cash Basis

  1. The basis of value-added tax on sale of real property under cash basis or deferred payment plan is:
  2. The higher between the selling price stated in the sales document or market value.
  3. Selling price stated in the sales document.
  4. Installment received plus interest and other charges.
  5. Gross receipts.

 

  1. Computation of output VAT
         Net sales

w/o VAT

    Total invoice

w/ VAT

Price           xxx          xxx
  Multiplied by             12%       12/112
Output VAT           xxx          xxx

I would like to invite you to join my Facebook exclusive groups of aspiring CPAs for my upcoming project “CPA DREAM ACADEMY ” or sign up for flashcards free http://eepurl.com/coJBmf

CPA Mentor,

JONATHAN RUIZ CPA, MIB

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About PAM Academy Founder

Newbie Mentor and one of the influential author in the Philippines setting. His also the founder of PAM Academy and Developer of PAM PSE TRACKER application.
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