1. What are “BIR zonal values”?
In Philippine tax law, zonal value is the fair market value of real property as determined and published by the Bureau of Internal Revenue (BIR) for a specific area, street, and property classification.
It is:
A tax valuation tool used by the BIR;
Determined per Revenue District Office (RDO) through BIR issuances (Revenue Regulations/Revenue Memorandum Orders);
Expressed per square meter and differentiated by:
- Location (city, barangay, sometimes specific street or subdivision/condo);
- Property type (e.g., residential, commercial, industrial, condominium, parking, etc.).
It is not:
- The market price you can or must sell at;
- A substitute for professional appraisal or bank appraisal;
- A guarantee of what buyers will pay.
In practice, zonal value is a minimum tax benchmark: if your declared selling price is below the BIR zonal value, the BIR will generally treat the zonal value (or another higher value) as the tax base.
2. Legal basis under the National Internal Revenue Code (NIRC)
The NIRC of 1997, as amended (including by TRAIN), provides the framework:
Commissioner’s power to determine real property values
- The BIR Commissioner is authorized to determine the fair market value of real properties and publish schedules of values for tax purposes.
- These are implemented through BIR issuances (Revenue Regulations and Revenue Memorandum Orders) that set zonal values per RDO.
Use of zonal value in taxes on real property transactions
Zonal value is especially important for:
Capital Gains Tax (CGT) on sale of real property classified as a capital asset
Rate: usually 6% of the highest of:
- (a) Selling price (in the Deed of Sale);
- (b) BIR zonal value; or
- (c) Fair market value in the Tax Declaration (LGU SMV).
Documentary Stamp Tax (DST) on sale or transfer of real property
- Levied on the same tax base, i.e., the higher of the selling price or fair market value (zonal value or tax dec value).
Donor’s Tax and Estate Tax
- For gratuitous transfers (donation or succession), the property is valued at fair market value at the time of donation or at the time of death;
- The fair market value is the higher between zonal value and the LGU Schedule of Market Values (SMV) in the tax declaration.
In short: zonal value is one of the “fair market values” recognized by law, and tax is computed on the highest relevant figure.
3. Zonal value vs. LGU Schedule of Market Values (SMV)
There are two main government valuations:
BIR zonal value
- For national taxes (CGT, DST, donor’s, estate);
- Determined by BIR.
LGU Schedule of Market Values (SMV)
- For real property tax (RPT) and related LGU matters;
- Issued by the City/Municipal Assessor.
For CGT, DST, donor’s, and estate taxes, the higher of zonal value and SMV is used as tax base if higher than the selling price.
4. Where does Air Residences fall in BIR jurisdiction?
Air Residences (SMDC) is located in Makati City, in the general area of San Antonio / Malugay–Yakal–Ayala Avenue Extension. For BIR purposes:
- Makati City is covered by specific Revenue District Offices (RDOs).
- Each RDO has its own zonal value tables for the areas under its jurisdiction.
To be precise for Air Residences or a condo near it, you must:
- Identify your exact address (tower, unit, building, street);
- Confirm the correct RDO for that location (through TIN registration, or by calling/visiting BIR).
The RDO number/name matters because each RDO has its own zonal value issuance listing streets and condominiums under it.
5. How are zonal values structured for condos near Air Residences?
In BIR zonal tables, properties near Air Residences typically appear under categories such as:
- “Condominium – Residential” (for residential units);
- “Condominium – Commercial” (if a unit is officially classified commercial);
- Parking slots or storage units may have separate entries.
Each line in a zonal value table usually includes:
- Location description (e.g., barangay, specific condo name, or street);
- Class (residential/commercial, condo/land, etc.);
- Unit value per square meter;
- Date of effectivity of the issuance.
For a condo near Air Residences, what matters is the exact listing that matches your property:
If the BIR issuance lists Air Residences by name, you use that entry;
If not, you look at:
- The barangay;
- The street or zone (e.g., Malugay/Yakal/Ayala Ext area);
- The classification (condominium residential).
6. How to check the (latest) BIR zonal value for a property near Air Residences
Since zonal values are time-sensitive and issued by BIR through official issuances, the safest process is:
Step 1: Gather your property details
Prepare:
Condominium Certificate of Title (CCT) or Transfer Certificate of Title (TCT);
Tax Declaration (land & improvement / condo unit);
Exact address:
- Tower, unit no.;
- Building name (e.g., Air Residences);
- Street;
- Barangay;
- City (Makati).
These are crucial when matching your property to the correct zonal entry.
Step 2: Confirm your Revenue District Office (RDO)
You can:
- Refer to your TIN registration (RDO where you are registered);
- Ask the BIR or your tax agent: “Which RDO covers Air Residences (or my specific address in Makati)?”
RDO confirmation is important because:
Zonal values are RDO-specific;
The right RDO must be used both for:
- Tax return filing (CGT, DST, etc.); and
- Zonal value reference.
Step 3: Obtain the applicable zonal value table
You have several practical options:
Visit or contact the RDO
Go to the BIR RDO that covers your property;
Ask for the latest zonal value table for your area;
Specifically mention:
- “Condominium unit near/at Air Residences, Makati”;
- Your barangay and street;
- Whether it’s residential or commercial.
Ask for a written certification (optional but safer)
You may request from BIR a “Certification of Zonal Value” for your specific location and classification;
This is often used in:
- Legal due diligence (e.g., for buyers/lenders);
- Estate settlement;
- Donor’s tax or CGT audits.
Check with the developer or broker (for guidance only)
- Developers (like SMDC) and seasoned brokers in Makati usually know or keep copies of the current zonal values used in recent transactions;
- However, only BIR issuances and certifications are legally authoritative. Developer info is just a practical reference.
Always check the effectivity date of the zonal value issuance. Use the schedule that is effective on the date of sale, donation, or death, depending on the tax involved.
Step 4: Match your property to the correct listing
When you have the zonal value table:
Locate Makati City → Barangay → Street / Condo Name;
Choose the correct classification:
- “Condo – Residential” for typical residential units;
- “Condo – Commercial” or similar for business-use units, if the BIR table distinguishes them.
Make sure:
- The description clearly covers your building (e.g., Air Residences or its immediate area);
- You are using the latest applicable issuance (there can be older and newer tables).
Step 5: Compute the zonal value for your unit
Formula (for a condo unit):
Zonal value = (BIR zonal value per sq.m. for your classification and location) × (floor area of the unit in sq.m.)
For a parking slot with its own zonal value, you do a separate computation.
Example (hypothetical numbers, not actual figures):
- Zonal value per sq.m. (Condo – Residential, your exact listing): ₱150,000
- Unit floor area: 26 sq.m.
Then:
- Zonal value of the unit = 150,000 × 26 = ₱3,900,000
You then compare this ₱3,900,000 with:
- Your selling price in the Deed; and
- The fair market value in the tax declaration.
The highest of those three becomes your tax base for CGT, DST, donor’s, or estate tax, as applicable.
7. How zonal value affects specific taxes
7.1 Capital Gains Tax (CGT) on sale of condominium near Air Residences
Who: Individuals (and certain corporate situations) selling real property classified as a capital asset.
Rate: Typically 6% of the gross selling price or fair market value, whichever is higher.
Fair market value = higher between:
- BIR zonal value; and
- LGU SMV in the tax declaration.
Tax base formula:
CGT base = higher of: (1) Selling price; (2) BIR zonal value; (3) Tax declaration value (SMV)
CGT due = CGT base × 6%
7.2 Documentary Stamp Tax (DST)
DST is likewise based on the highest of selling price or fair market value.
- Fair market value again uses the higher of zonal value or tax dec SMV.
- DST rates depend on the current law, but the tax base determination follows the same “higher of” rule.
7.3 Donor’s Tax (if you donate a unit near Air Residences)
For a donation:
- Fair market value at the time of donation governs;
- The law considers the higher of BIR zonal value and LGU SMV;
- That value becomes your tax base for donor’s tax, subject to applicable exemptions and rates.
7.4 Estate Tax (if the unit passes by succession)
At death:
- Real property is valued at its fair market value at the time of death;
- Again, for real property, fair market value is the higher of zonal value and SMV;
- This value feeds into the gross estate for determining estate tax.
8. Timing issues: Which zonal value applies?
Because zonal values can be revised, the question is: Which schedule applies?
General practice:
- For CGT and DST on a sale, the relevant date is the date of notarization of the Deed of Sale (or date of sale if clear);
- For donor’s tax, it’s the date of donation;
- For estate tax, it’s the date of death.
Thus:
- If a new BIR issuance increasing zonal values takes effect after your deed was notarized, generally the old zonal value (effective at the time of notarization) applies.
- If it takes effect before notarization, you use the new zonal value.
Always double-check dates on:
- The BIR issuance (RR/RMO) setting zonal values;
- Your deed / donation documents / death certificate.
9. Underdeclaration and audit risk
For Makati properties – especially near high-value areas like Air Residences – underdeclaration is a common area of BIR scrutiny. Key points:
Declared selling price below zonal value
- BIR will still tax you on the higher zonal value (or tax dec value).
- Underdeclaration may attract audit, surcharges, and interest if taxes are short-paid.
Declared selling price above zonal value
- Taxes will be computed on the higher selling price.
- Zonal value no longer caps liability; it only sets a floor.
Penalties
- Surcharges (e.g., 25% or 50% in fraud cases);
- Interest per annum;
- Possible compromise penalties and administrative sanctions.
In pricey locations like Makati, the BIR often focuses on:
- Unusual underdeclarations relative to recent market prices;
- Transfers among related parties;
- Repeated transfers at suspiciously low prices.
10. Special issues for condos near Air Residences
Residential vs commercial classification
- If you use a residential condo as an office without changing its official classification, BIR may still use the residential condo zonal value;
- If officially classified as commercial (e.g., lower floors, certain designations), a different – usually higher – zonal value may apply.
Parking slots
- Parking slots may have separate zonal values;
- In a sale, if parking is included but with a separate CCT, it may require separate computation.
Mixed-use structures
Air Residences and nearby developments often have commercial areas (podiums, ground-floor units) and residential towers;
Zonal tables may separate:
- “Condo – Residential, above X floor”;
- “Condo – Commercial”;
- “Land – Commercial” for ground floor land components.
Pre-selling vs. titled units
- For pre-sold units where titles are not yet individually transferred, there can be nuances in which documents are used for valuation;
- However, when computing taxes upon transfer (e.g., when deed of absolute sale is executed), the zonal value at the time of transfer still applies.
11. Practical tips for owners and buyers near Air Residences
Get the exact zonal value from BIR before signing
- Before finalizing the selling price, check what BIR will treat as minimum tax base.
- This helps avoid surprises when computing CGT and DST.
Align with your broker and tax agent
- Ask them plainly: “What BIR zonal value per square meter is being used for my condo near Air Residences, and what issuance is it based on?”
- Request a copy or clear reference of the issuance.
Keep property documents updated and accessible
- CCT/TCT, tax dec, and proof of payments are essential in any tax discussion with BIR.
Consider a BIR Zonal Value Certification for big or contested deals
- For large-value sales, donations, or estates, having a formal BIR certification significantly reduces valuation disputes later.
Plan for future increases
- Makati zonal values tend to increase over time as the area develops;
- If you’re doing estate planning or long-term holding, factor in potential tax impact of future zonal value revisions.
12. Limitations and legal caution
Zonal values are highly specific (by street/condo, classification, and effective date) and updated by official BIR issuances.
Without the current official table from the BIR RDO covering your exact location near Air Residences, any exact peso per square meter figure would be speculative.
For legally reliable computations and for submission to BIR, always:
- Obtain the latest official zonal value from BIR; and
- Seek advice from a Philippine tax lawyer or accredited tax practitioner who can review your documents and transaction details.
This article gives you the legal framework and process for understanding and checking BIR zonal values in Makati, especially around Air Residences. But for any actual sale, donation, estate settlement, or BIR filing, it’s prudent to verify the exact current zonal value directly with BIR and obtain tailored professional advice.