Donating Real Property to a Nephew in the Philippines: Donor’s Tax Rules for Dual Citizens

This article explains, in plain English, how donor’s tax works when a Filipino dual citizen donates Philippine real estate to a nephew. It focuses on Philippine rules and the practical steps to complete the transfer.

1) The basics: What is taxed and who pays?

Donor’s tax is a Philippine tax on transfers of property by gift (i.e., without adequate consideration).
The donor (giver) is the taxpayer. The nephew (donee) does not pay donor’s tax in the Philippines.
Real property located in the Philippines is within the Philippine taxing jurisdiction. If you donate land/condo in the Philippines, the gift is subject to Philippine donor’s tax regardless of where you live or your second citizenship.

Key point for dual citizens: Your dual status doesn’t change the Philippine taxability of a gift of Philippine-situated real property. It may, however, create foreign tax considerations in your other country of citizenship (see Section 12).

2) Rate, threshold, and tax base

Uniform rate: 6% donor’s tax.
Annual exemption: The first ₱250,000 of net gifts made by the donor during the calendar year is exempt.
Aggregation rule: Add all gifts you make during the same calendar year (any property, to anyone). Only the excess over ₱250,000 is taxed at 6%.
Tax base (for real estate): Use the higher of:
- BIR zonal value, or
- The fair market value per the local assessor’s schedule of values (i.e., real property tax value).
- For improvements (e.g., a house on the lot), the building is valued separately and added.

Example (single gift in the year): FMV (higher of zonal or assessor): ₱8,000,000 Less annual exemption: ₱250,000 Taxable base: ₱7,750,000 Donor’s tax @ 6%: ₱465,000

3) Relationship to nephew

A nephew is within the third degree of consanguinity under civil law.
For donor’s tax today, the rate is the same regardless of whether the donee is a relative or a “stranger.” Relationship still matters for civil law effects (see Section 9), but not for the 6% rate.

4) Situs and residency nuances

Property in the Philippines: Always within Philippine donor’s tax scope.
Residency of donor: Determines scope for non-Philippine property, but since you’re donating Philippine real estate, the gift is taxable in the Philippines whether you reside here or abroad, and whether you are a citizen or an alien.

5) Who can own the land? (Citizenship of the nephew)

Land ownership in the Philippines is generally limited to Filipino citizens and qualified entities.
If your nephew is a foreign citizen only, he cannot own Philippine land by donation (or purchase), except by hereditary succession.
If your nephew is a Filipino (including dual citizen), ownership is allowed (subject to other laws and any constitutional caps for certain classes of property).

Condos: Foreigners may own condominium units only if the project’s overall foreign ownership stays within statutory caps; donation rules still apply.

6) Filing, deadlines, and forms

Return: BIR Form 1800 (Donor’s Tax Return).
Deadline: Within 30 days after the date of donation.
Payment: Due upon filing.
One return per donation. If you make multiple gifts in the year, you file for each gift; the exemption aggregation still applies year-to-date.

7) Core documentary requirements (typical set)

Expect local variations and updated checklists from the RDO/ROD; prepare these staples:

Deed of Donation (public instrument) describing the property and any charges/conditions.
Acceptance by the donee (see Section 8 for formalities).
TCT/CCT and latest tax declaration (land and improvements).
Real property tax (RPT) clearance and latest RPT receipts.
IDs/TINs of donor and donee; marital status documents if applicable.
Proof of valuation: BIR zonal value printout and assessor’s FMV certifications.
If donor or donee is abroad: Consularized or apostilled documents and special powers of attorney (if using an attorney-in-fact).

After assessment and payment, the BIR issues an electronic Certificate Authorizing Registration (eCAR)—this authorizes transfer of title at the Registry of Deeds.

8) Civil law formalities for a valid donation of real property

Must be in a public instrument (notarized) that specifically describes the property and any conditions.
Acceptance must be made by the donee in the same deed or in a separate public instrument.
- If acceptance is in a separate instrument, the donor must be formally notified, and such notification must be noted in both instruments.
If the donor is married and the property is conjugal/community, spousal consent is ordinarily required (unless the property is exclusive).
Minors: If the nephew is a minor, a legal guardian accepts the donation; later acts of disposition may require court approval.

No proper acceptance = no valid donation. This is a frequent—and costly—mistake.

9) Interaction with legitimes and future estate matters

Donations you make during your lifetime may be collated into your estate for the purpose of safeguarding the legitimes of compulsory heirs (spouse, legitimate/illegitimate children, ascendants when applicable).
Inofficious donations (those that impair legitimes) may be reduced upon your death. Plan gifts with your family tree and asset mix in mind.

10) Other taxes, fees, and costs commonly encountered

Local Transfer Tax: Cities/municipalities typically levy a local transfer tax (rates and deadlines vary; 60-day filing windows are common).
Registration fees at the Registry of Deeds, plus annotation fees.
Assessor’s office fees for issuing a new tax declaration in the nephew’s name.
Notarial and processing charges.
Documentary Stamp Tax (DST): A deed of donation of real property generally triggers DST on the conveyance instrument (amount/matrix set by law/regulations).

(Rates and payment points differ by locality. Treat these as separate from donor’s tax.)

11) Step-by-step timeline (practical playbook)

Pre-check: Confirm the nephew’s citizenship/eligibility to own the property class. Clear RPT arrears.
Valuation: Secure zonal value and assessor FMV; pick the higher (add value of improvements).
Draft deed: Incorporate clear acceptance; include any conditions (e.g., right to use, reversion clauses). Get spousal consent if required.
File BIR Form 1800 within 30 days of the donation; pay 6% on your year-to-date net gifts exceeding ₱250,000; pay DST if applicable.
Obtain eCAR from the BIR.
Pay local transfer tax at the city/municipal treasurer within the statutory period.
Register the transfer at the Registry of Deeds (submit eCAR, owner’s duplicate title, tax clearances, IDs, etc.).
Update the tax declaration at the Assessor’s Office.
Donee takes over future RPT obligations.

12) Dual-citizen cross-border considerations

Foreign gift/transfer taxes. If you’re also a citizen of a country that imposes gift tax on worldwide gifts (e.g., the U.S.), a foreign gift tax could arise in addition to the Philippine donor’s tax.
Treaty relief and credits. Some countries have estate/gift tax treaties with the Philippines that may provide credits or tie-breaker rules to mitigate double taxation.
Reporting obligations: Even if no foreign gift tax is due, informational returns may be required abroad (penalties for non-filing can be severe).
Currency & remittances: If paying Philippine tax from abroad, plan forex conversion, payment channels, and document apostilles or consularization early.

Practical tip: Coordinate Philippine counsel and foreign tax counsel before executing the deed. Align the date of donation, valuation evidence, and cash availability for taxes to avoid deadline crunches.

13) Penalties and risk areas

Late filing/payment: Surcharges (typically 25%, or 50% for willful neglect/false returns) plus interest and compromise penalties may apply under the NIRC.
Defective acceptance or missing spousal consent: Can invalidate the donation or complicate title transfer.
Under-valuation: BIR may assess using the higher value (zonal vs assessor). Keep all valuation printouts.
Unsettled RPT: Delays issuance of clearances and title transfer.
Ignoring legitimes: May invite post-mortem disputes and reduction of the gift.

14) Computation snapshots

A. One gift this year

Property FMV (higher of values): ₱6,500,000
Less exemption (annual): ₱250,000
Taxable base: ₱6,250,000
Donor’s tax (6%): ₱375,000

B. Second gift within the same year

Prior net gifts YTD: ₱200,000
New property FMV: ₱3,000,000
Aggregated net gifts YTD after second gift: ₱3,200,000
Exemption applies once: ₱250,000 (to the year, not per gift)
Taxable portion for the second filing must consider that only ₱50,000 of the remaining exemption (₱250,000 − ₱200,000) is left.
- Taxable amount now: ₱3,000,000 − ₱50,000 = ₱2,950,000
- Donor’s tax (6%): ₱177,000

(Keep a running worksheet for YTD gifts to avoid miscomputations.)

15) Estate planning angles if you prefer to help (or limit) the nephew

Usufruct/reservations: You can reserve a lifelong right to use or receive income from the property (usufruct), donating bare ownership to the nephew now. Donor’s tax is computed on the value transferred (considering the split).
Conditions/reversion: You may impose resolutory conditions (e.g., reversion to you if certain events occur), but structure them cleanly to avoid title defects.
Trusts: Philippine law recognizes trusts, but property registrations and tax consequences must be handled carefully.
Timing: Align donations with family needs, RPT cycles, and your cash flow for taxes.

16) Quick compliance checklist

Nephew eligible to own the property (citizenship; condo foreign cap if applicable)
Zonal value and assessor FMV on hand (and building value, if any)
Deed of Donation prepared; acceptance properly made; spousal consent if needed
BIR Form 1800 filed within 30 days; 6% donor’s tax and DST paid
eCAR released
Local transfer tax paid timely
Title transferred at Registry of Deeds; new tax declaration issued
Foreign tax filings/credits considered (if relevant)

17) Frequently asked questions

Q: Is capital gains tax (CGT) due on a donation? A: No. CGT applies to sales. A donation is subject to donor’s tax (and DST, local transfer tax, and registration fees).

Q: Can I donate only a portion or an undivided share? A: Yes. You can donate a percentage/undivided share. Values and taxes are computed pro-rata.

Q: Do I still pay if property is mortgaged? A: You can donate subject to mortgage. If the nephew assumes the debt, that assumed liability reduces the net gift; any excess value transferred remains subject to donor’s tax.

Q: What if I donate to multiple nephews/nieces this year? A: Aggregate all gifts for the year to apply the ₱250,000 exemption once; each deed still requires its own filing within 30 days.

18) Final takeaways

A gift of Philippine real property to your nephew by a dual citizen donor is squarely within Philippine donor’s tax at a 6% rate, after a ₱250,000 annual exemption on the donor’s total net gifts.
The paperwork (proper acceptance, spousal consent, eCAR, local transfer tax, title/assessor updates) is as critical as the tax payment.
If you are a dual citizen, map out any foreign gift tax/reporting and consider treaty relief or credits.

This is general information for educational purposes and is not a substitute for advice tailored to your facts. For transactions in flight, coordinate with your BIR RDO, the local treasurer/assessor, and qualified counsel.