REAL ESTATE MATHEMATICS

SAMPLE PROBLEMS ( REF: 0505)

I. PERIMETER FENCING PROBLEM
1.

A perimeter wall will be constructed on a 340 sqm. regular lot having a frontage of 14
meters. The wall is one meter below and 4 meters above ground. If cost is P900.00 per
sqm. compute the total cost of the wall excluding a 4 meter wide gate.

2.

Mr. Castro owns a 540 sqm. rectangular lot with a 16 meter frontage. He wanted to
enclose it with a fence made of hollow blocks, 2.5 meters high above the ground with 1.0
meter below the ground. The fence cost P650.00 per square meter. How much will the
fencing cost if a 4 meter wide steel gate costing P45,500.00 is installed.( 5 pts.)

II. MACEDA LAW

3.

Mr. Cruz bought a 280 sqm. subdivision lot at P8,000.00/sqm. He paid 25%
downpayment the balance payable in 120 equal amortizations at 21% interest per
annum. He has paid 84 monthly amortizations and paid penalty interest of P81,000.00.
Compute for his cash surrender value under the Maceda Law.

III. TAXATION
4.

In a sale of condominium unit, the following information were gathered:

Value per Deed of Sale
Zonal Value of Condominium Unit
Market Value of Condominium Unit
Assessor Value of land where the
Condominium unit is built
Zonal value land where condominium
Project is built
Floor area of the condominium unit sold

P3,000,000.00
P22,500.00/sqm.
P1,500,000.00
P2,500.00/sqm.
P5,000.00/sqm.
150 sqm.

Compute for the capital gains tax on the above transaction.

5.

An 800 sqm. lot with a house was sold for P3,500,000.00. Per tax declaration, the market
value of the house is P1.5 M and lot is P1.6M. The zonal value of the lot is
P3,500.00/sqm. The sale is subject to capital gains tax.
a. Compute the tax base
b. How much is the capital gains tax
c. How much is the documentary stamps

6.

A CREBA-registered developer is selling a house and lot package at P950,000.00 per

unit.
a. Compute the expanded withholding tax and documentary stamps
b. How much is the value added tax?

7.

A corporation is the lessor of a 7-door residential apartment with a monthly rental as

follows: 3 doors at P8,000.00 each and 4 doors at P10,000.00 each. It incurred
P20,000.00 worth of VAT-invoiced expenses for repair and maintenance for January,
1998. Compute the VAT payable for the month of January 1998.

8.

Mr. Tan bought a subdivision lot for P500,000.00. He paid a 20% downpayment, balance
payable in 5 years at 21% interest per annum. The lot was contracted in December 1994
and his monthly amortization starting January, 1995 is P10,820.00. E-VAT was
implemented effective January, 1996.

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a. Is his payment starting January 1996 subject to EVAT? Why?

b. How much is the total monthly amortization as of May 1996?
9.

Gross sales receipts of a VAT-registered developer for 1996 were P1,100,000.00 for
January; P1,850,000.00 for February; and P880,000.00 for March. Purchases from VATregistered suppliers were P660,000.00 for January; P770,000.00 for February; and
P550,000.00 for March. Compute for the a) Output Tax; b) Input Tax; VAT payable for
the months of January, February and March.

10. A CREBA-registered developer offers three house and lot packages as follows: a)
P450,000.00 per unit in Cabanatuan City; b) P900,000.00 per unit in Sta. Rosa, Laguna;
and c) P2,00,000.00 per unit in Quezon City. Compute the expanded withholding tax for
each package.
11. Mr.Timbol sold his property for P1,800,000.00 with a downpayment of P1,200,000.00 and
the balance which was secured by a mortgage in the same property is payable in one
year. Compute the Documentary Stamp Tax in order to register the transaction. (5%)
IV. SELLING PRICE/BROKER'S COMMISSION
12. Mr. Samson hired the services of a broker to sell his property. The owner said he bought
it at P6,300,000.00 and wants a 30% gross profit. If you were a broker, at how much
would you sell the property? If you will be paid 5% commission, how much shall be
added to the selling price that the 30% profit of Mr. Samson will not be affected?
13. A real estate broker has a listing where the seller agreed to should capital gains tax and
broker's 5% commission. At how much should the broker sell the property in order that
the seller will realize a net proceed of P4,895,000.00?
14. At how much should Adora sell her property acquired at P6,300,000.00 is she desires a
30% gross profit rate?

15. Ms. Cruz, a licensed real estate broker obtained a net listing of P6,500,000.00. She sold
the property at a price which is inclusive of her 5% commission, capital gains tax and
documentary stamps. The Deed of Sale provides that the buyer will pay for the transfer
and registration fees. At how much was it sold?
V. DEVELOPMENT COSTINGS
16. A corporation bought 50 hectares of land for P700.00/sqm. If high-end development
costs P1,000.00/sqm. based on saleable area which is 60% of the gross area, compute
the following:
a.
b.
c.
d.

Total land acquisition cost

Total development cost
Total unit cost per sqm. of the saleable lots
If the projected gross mark up is 100% of the total unit cost/sqm. of saleable lots,
what will be the selling price per sqm.

17. A broker, before offering to his client a hectare land for low-cost housing, prepared a
simple profitably statement. The estimated development cost is P300/sqm. based on the
gross area. Construction cost of the 100 housing units is P3,000.00/sqm. with each unit
having a floor area of 60 sqm. The land is being offered at P300/sqm. and the selling
price per housing unit is P450,000.00. how much is his gross profit?
18. A corporation is developing a 10-hectare rawland purchased at P400.00 per sq.m.
Development cost is estimated at P300.00 per sq.m. based on the gross area. Marketing
inclusive of advertising and broker's commission is 15% of selling price. If the company
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desires a gross profit of 30% of selling price, what would be the minimum selling price per
sqm. of the subdivision lots assuming that saleable area is 70% of gross area. ( 5 pts.)
VI. AMORTIZATIONS/ INTEREST/ INSTALLMENT

19. Jose bought a 1,060 sqm. lot at P1,400.00 sqm. on installment basis with 50%
downpayment and the balance payable in 5 years at 21% interest per annum. After 3
regular monthly amortizations, he decided to pay in the full balance.
Compute the
following : (Factor is 0.02705)
a.
b.
c.
d.
e.

Amount of downpayment
Monthly amortization
Interest expense for 3 months
Balance after 3 months
Final cost/sqm. after full payment

VII. PROFIT/ INCOME

20. Mr. Blue sold to Mrs. Reed in June 1997 a residential lot for P960,000.00 inclusive of a
P100,000.00 mortgage to be assumed by the buyer. Mrs. Reed gave a downpayment of
P60,000.00 and the balance shall be paid in 8 equal monthly installments without interest
beginning July 1997. Mr. Blue realized a gross profit of 25% of acquisition cost.
Compute the following:
a.
b.
c.
d.
e.
f.

Selling price
Contract price
Initial payment for taxable year 1997
Gross profit
Gross profit rate for tax purpose
Taxable income for 1997 and 1998

21. An investor bought an apartment property for P45M. The property earns a monthly
income of P300,000.00 and its annual fixed and operating expenses total P400,000.00.
What is his rate of return on investment?
22. Mr. Cui is into land banking. He bought a 3-hectare rawland at P10/sqm.
a. If his cost of money is compounded 100% every 5 years, what will be his cost
after 20 years?
b. If he will sell the land for P200/sqm. after 20 years, what will be his gross profit?
VIII. DETERMINING ACQUISITION COST
23. A 4-door apartment is being rented for P6,000.00 per door, and is subject to annual
maintenance of P14,400.00 and realty tax of P6,000.00. A buyer for the property is
satisfied with a 12% return on investment. At how much should he buy the property?
24. A prospective buyer of a house and lot 300 sqm. consulted his architect who advised him
that the present cost to duplicate the house is P3M. The architect also estimated that
effective age of the house is 10 years and the economic life for such structure is 50
years. If the buyer is willing to pay P5,000.00 per sqm. lot, at how much should he buy
the property?

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25. An apartment property has an annual net income of P150,000.00. A buyer can avail of a
mortgage loan equivalent to 70% of the capital requirement at 15% annual interest. If the
buyer is satisfied with a 10% yield on his equity, at how much should he buy the
property?
26. A property has an annual gross income of P1,200,000.00. In his market study, an
investor found that a comparable property with an annual gross income of P1 Million was
recently sold for P6 Million. On the basis of the gross income multiplier indicated by the
comparable property, at how much should he buy the property?
IX. PROPERTY MEASUREMENTS
27. The title of the property describes the land as consisting of 6 hectares, 75 ares, and 800
centares. What is the area of the land in square meters?
X. APPRAISAL OF PROPERTY
28. A parcel of land has the following features: area is 900 sqm.; it is a corner lot; higher than
the road, and almost rectangular in shape. If the prevailing price in the area if
P10,000.00/sqm. and subject lot has a corner influence of 15%, topographic value of 5%
because of elevation, and plottage value of 10% because of shape, determine the fair
market value of the lot.
29. A 5-storey building was constructed on an 800 sqm. lot 10 years ago. Floor area is 400
sqm. per floor. Present reproduction cost of the building is P10,000.00/sqm. and the land
was purchased five years before the building construction at P5,000.00/sqm. Assuming
the depreciation rate of the building is 2.5% per year while land appreciation is 5% per
year, what is the fair market value of the property?

Real Estate Mathematics