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:
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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 BIRtable 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.
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What’s 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/noncitizensas 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
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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.
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What about the estate tax’s deadline for payment?
The estate tax must be paid on the day it is filed. However, the BIRCommissioner 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
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Can the estate tax be paid in installments?
Yes, it can.
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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.
If you have more questions, get in touch with Duran & Duran-Schulze Law for expert advice on Philippine estate taxes and more.
Call (+632) 478 5826 or email info@duranschulze.com.
35 Responses
Hi, i would like to inquire about the married couple before 1977 which is both decease. the children file for estate tax of the parents, but unfortunately, only the mother has given estate tax from BIR and the father was not issued estate tax.
Now the title of the property is on hold for transferring to the heirs because of the lacking documents for registration.
– The question is, the inherited property was not a conjugal property if married before 1997? is there any BIR law about this?
Need response please.. my wife and I were married 15 years. Sadly she passed away last year while we were living there. We keep my / our money in a bank account under her name now the bank is demanding 2.5 m of it forvl taxes.. is that legal. I am the rightful owner of it even though we put it in her name. Plz reply ty
Hello. I already paid the estate tax and i am ready for filing it at the ROD…
Do i have to pay the transfer tax? Someone told me to pay it as it is one of the requirements for submission at ROD.
What happens if the lot owner dies and the lot buyer is not yet able to transfer land title while lot owner was still alive? Who will pay the estate tax now that the owner is dead?
Hi..just want to ask, my parents would like to transfer a land property to me and in the title stated that she’s the owner “married to” my father….my question is “what if” something happened to my father meaning my father died, do i need to file an estate tax? The property is an inheritance from my mother’s parents.
If i need to file an estate tax, what kind of a document should i file?
Deed of Donation? But i will no longer put the name of my father as “married to”
Any suggestion?
Appreciate it very much..thank you