Philippine Inheritance Tax
An individual who inherits real estate in the Philippines is required to pay an estate tax in order to legally transfer the property to their name.
It is not a tax on property, according to the Bureau of Internal Revenue (BIR) of the Philippines. Rather, “it is a tax imposed on the privilege of transmitting property upon the death of the owner.” The rules and regulations in effect upon the death of the owner govern the payment of the tax, even if the beneficiary postpones the possession of the inherited property.
Philippine Estate Tax
Here are some of the most frequently asked questions about Philippine estate tax:
1. How is the Estate Tax Determined?
To calculate the estate tax, determine the benefactor’s net estate and subtract the allowable deductions under Section 86 of the Philippine Tax Code.
Thus:
Net share = Gross estate – Deductions
The net share shall then be subject to the estate tax based on the BIR table below, which has been in effect since January 1, 1998.
All figures are in Philippines pesos
| Over | But not Over | The tax shall be | Plus | Of the excess over |
| 200,000 | Exempt | |||
| 200,000 | 500,000 | 0 | 5% | 200,000 |
| 500,000 | 2,000,000 | 15,000 | 8% | 500,000 |
| 2,000,000 | 5,000,000 | 135,000 | 11% | 2,000,000 |
| 5,000,000 | 10,000,000 | 465,000 | 15% | 5,000,000 |
| 10,000,000 | 1,215,000 | 20% | 10,000,000 |
For example: if the inherited estate’s net share is PHP 2.5 million, the estate tax is PHP 135,000 plus 11% of PHP 500,000 or PHP 55,000. Thus, the tax due is PHP 190,000.
2. What is Included in the Gross Estate?
The gross estate is the value of all property and assets in the estate before liability deductions.
These include:
- Real/immovable property
- Tangible personal property
- Intangible personal property – wherever located – for deceased resident aliens/citizens
The same applies to deceased nonresidents/noncitizens as long as the property is located in the Philippines.
Additionally, the BIR identifies intangible personal property as:
- Franchises exercised in the Philippines
- Philippine shares, obligations, or bonds
- Shares, obligations, or bonds issued by a foreign corporation with 85% of its business located in the Philippines
- Shares, obligations, or bonds issued by a foreign corporation which have acquired business sites in the Philippines
- Shares, rights in any partnership, business, or industry established in the Philippines
3. Is There a Deadline for Filing the Tax Return?
Yes. Returns must be filed within 6 months of the benefactor’s death. The BIR Commissioner alone can grant extensions that do not exceed 30 days.
4. What About the Estate Tax’s Deadline for Payment?
The estate tax must be paid on the day it is filed. However, the BIR Commissioner retains the option to extend the date of payment if it will cause “undue hardship on the estate of the heirs.”
The estate tax extensions are:
- 5 years forestates settled in court
- 2 years forestates settled out of court
5. Can the Estate Tax be Paid in Installments?
Yes, it can.
6. What Happens If the Estate Tax Goes Unpaid?
If the estate tax is unpaid, the inherited property cannot be transferred to the heir’s name. Neither can the property be sold because a certificate of title cannot be issued confirming the heir’s right of ownership.
Need further information and assistance regarding Philippine Estate Tax or Philippine Inheritance Tax? Talk to our team at Duran & Duran-Schulze Law in Bonifacio Global City, Taguig, Philippines to know more about the requirements and process. Call us today at (+632) 8478 5826 or +63 917 194 0482, or send an email to info@duranschulze.com for more information.
35 Responses
A friend in Spain who is very ill wants to give my husband 270000 US Dollar as a gift. Do we need to pay tax? How much? Thanks
Hello po,
Pwede po makahingi ng tulong?
Ang title po nakapangalan pa kay Lola, si Lola at ang nanay pareho na pong wala. 4 na anak po ni lola ang magmamana ng lupa, sa 4 na anak 3 po ang wala na kasama ang nanay ko. Ang sabi po ng nag-aayos ng lupa, 3 beses daw po kaming magbabayad ng estate tax, mula kay lola, kay nanay at ako po. Ang sukat po ng lupa 575 sqm nasa Calobaoan Pangasinan. Ang zonal value po ay nasa P450.00 to P470.00 per sqm. Tama po ba na 3 beses talaga kami dapat magbayad ng estate tax or total of P89 thousand? Pa advise po please. Thank you so much.
If it is a conjugal property and the partner died, do the spouse liable to pay Estate tax?
just want to ask where will we start ? my father in law was already dead since 1995 and all his properties were not yet transfered to his wife’s name until now 2022,my mother in law…now my mother in-law wants to transfer these lands to her name..I know that she needs to pay fisrt the estate tax..its been 27 yrs since my father in law has died..My question is where will i start? where will I go first? is it in the municipality, in the assessor’s office or in the BIR…I hope you can condider answering mg concerns.Thank you so much for your help in advance.
Is there no tendency for the gov’t to get the property if estate tax is unpaid. Thank u.