DONOR’S TAX ON JOINTLY-OWNED PROPERTY (Philippine National Internal Revenue Code, as amended to 2025)
1. Legal Framework
| Source | Key Provisions |
|---|---|
| NIRC 1997, Title III (Secs. 98-104) | Imposes donor’s tax; defines “net gifts,” “stranger,” date of donation, exemptions, valuation, filing & payment rules. |
| TRAIN Law (RA 10963, eff. 1 Jan 2018) | Collapses the old graduated schedule into a single 6 % rate on all net gifts above ₱250,000 per donor per calendar year. |
| Revenue Regs. (RR) No. 12-2018, RMC No. 5-2019, et al. | Implementing rules on valuation, filing (BIR Form 1800), and penalties. |
| Civil Code (Arts. 734-764; 162-166; 109-147) | Formalities of donations; rules on co-ownership (Art. 484 et seq.) and marital property regimes. |
| Family Code (Arts. 75-144) | Absolute Community of Property (ACP) & Conjugal Partnership of Gains (CPG). |
| Documentary Stamp Tax Law (Sec. 196, NIRC) | 1.5 % (₱15 per ₱1,000) on the donation’s FMV, payable in addition to donor’s tax. |
2. What Counts as “Jointly-Owned” Property?
| Scenario | Legal Nature | Typical Shares |
|---|---|---|
| Co-ownership among siblings | Civil Code Arts. 486-498 | Pro-rata per title (often equal). |
| Spouses under ACP/CPG | Family Code Arts. 96, 124 | Each spouse = 50 % beneficial interest. |
| Undivided heirs (intestate estate) | Succession co-ownership until partition | Shares per legitime/intestacy. |
| Partnership or unregistered joint venture | Property owned by partnership entity | Gift by the partnership = gift by each partner in proportion to capital interest unless entity is a juridical person with its own donor’s tax liability. |
Key effect: Each co-owner is treated as a separate donor on his/her proportionate share. If two spouses donate a community lot, there are two donors; the children are donees.
3. Essential Elements of a Valid Donation
Donative intent (animus donandi)
Delivery or constructive delivery (public instrument for immovables).
Acceptance by the donee (or legal representative) during the donor’s lifetime, noted in the instrument.
Authority & consent
- ACP/CPG property: both spouses must sign unless donation is “moderate” & customary (Art. 98 FC; BIR treats real property donation as not moderate).
- Co-owned property: donation of the entire thing needs unanimous consent; donation of undivided share needs only the individual co-owner’s consent.
Absent any of these, the transfer may be void → no taxable donation (but may be re-characterized as another taxable event, e.g., sale).
4. Valuation Rules (NIRC § 102, RR 12-2018)
| Property Type | Fair Market Value (FMV) Basis at Date of Donation |
|---|---|
| Real Property | The higher of: (a) BIR zonal value; or (b) fair market value as per the latest LGU schedule of values (RPT). |
| Shares of Stock | – Listed: closing price on trading day nearest the donation. – Unlisted: book value per latest audited FS prior to donation date. |
| Other personalty | Actual FMV (appraisal, replacement cost, etc.). |
Round FMV to the nearest peso. No discount for minority interest unless BIR audit evidence supports it.
5. Net Gift and Deductions
Net Gift = FMV – (allowable deductions)
| Deduction | Notes |
|---|---|
| ₱250,000 annual exemption | Per donor, not per donee (NIRC § 99[A]). |
| Encumbrances the donee assumes | e.g., mortgage on a donated house; deduct outstanding principal (not interest). |
| Donations made to Government, accredited NGOs, or international orgs. | Entire gift is exempt (NIRC § 101[A]). For NGOs, must be “not more than 30 % for admin purposes.” |
| Dowries (NIRC § 101[B]) | Up to ₱10,000 per spouse; largely obsolete under TRAIN because the first ₱250,000 is already exempt. |
6. Tax Rate and Computation Post-TRAIN
Tax Due = 6 % × (Total net gifts this calendar year in excess of ₱250,000)The 6 % is flat, applies regardless of whether the donee is a “stranger.” Prior-TRAIN gifts may still be assessed at the old graduated rates if the BIR discovers them (Sec. 205 NIRC, 3-/5-/10-year prescriptive periods).
7. Illustrative Computations
7.1 Donation by Spouses of ACP House to Two Children
- FMV of house (per BIR zonal value) : ₱8,000,000
- Ownership: ACP → each spouse owns 50 % → ₱4 M each donor.
- Donees: Son and Daughter (relatives) receive the house equally.
| Step | Husband | Wife |
|---|---|---|
| Net gift (₱4 M – ₱250k) | 3,750,000 | 3,750,000 |
| Donor’s Tax (6 %) | ₱225,000 | ₱225,000 |
| DST (on whole property) | ₱8 M × 1.5 % = ₱120,000 (shared or paid by any party) |
7.2 Three Siblings Donate Their Undivided 3/5 Share in Land to Church
- FMV of land: ₱5,000,000
- Donated share: 60 % → ₱3,000,000 total.
- Each sibling donor share: ₱1,000,000 → donation to qualified religious charity exempt under § 101[A].
- No donor’s tax, but file BIR Form 1800 and supporting NGO accreditation.
- DST is likewise exempt for donation to charitable institutions (Sec. 199[N] NIRC).
7.3 Stranger Gift of Condominium by Business Partners
Partner A & B (unmarried friends) co-own a condo 50-50. They donate A’s one-half to B (thus B acquires 100 %).
- FMV one-half: ₱6,500,000.
- Net gift: 6,500,000 – 250,000 = 6,250,000
- Donor’s tax: 6 % × 6,250,000 = ₱375,000 (No higher rate—even though B is a “stranger”—because TRAIN removed the 30 % rule.)
8. Procedural Requirements
| Requirement | Timeline | Form |
|---|---|---|
| File Donor’s Tax Return | Within 30 days after date of donation | BIR Form 1800 (manual or eFPS/eBIRForms). |
| Pay Tax & DST | Same 30-day deadline; venue: any AAB/RCO under RDO of donor. | |
| Attachments | • Deed of donation (notarized) • Proof of FMV: BIR Ruling/Zonal Value Certification, RPT schedule • Marriage Cert./Birth Cert. (to prove relationship) • Authority to Sell (if encumbered) • Sworn Statement of Assets if required (large gifts) |
|
| Transfer Titles | BIR eCAR required before Registry of Deeds/Stock Transfer. |
Penalties: 25 % surcharge (or 50 % for fraud) + 12 % interest p.a. (or higher under TRAIN). Criminal liability: Sec. 254-258 NIRC.
9. Special Issues & Planning Points
- Splitting Gifts Across Calendar Years – Because the ₱250 k exemption resets every Jan 1, staging large donations can trim the taxable base.
- Donation vs. Sale for “Love & Affection” – If consideration < FMV but not nil, BIR may deem the difference as a partly exempt sale + taxable donation.
- Life Estate Reservations – Donor keeps usufruct; FMV of retained interest excluded from net gift (use actuarial tables, RR 12-2018).
- Donation mortis causa or Inter Vivos? – If transfer takes effect only upon death, estate tax (6 %) applies instead. Deeds with “effective upon death” clause trigger estate, not donor’s, tax.
- Foreign-situs Property – Resident citizens taxed on worldwide gifts; non-resident aliens only on gifts of Philippine-situs properties (Sec. 104).
- Tax-Free Exchanges – Sec. 40(C)(2) reorganization rules do not apply to pure donations; donor’s tax always considered.
- Successive Co-owners – If one co-owner donates to another, the donee’s share increases, but other co-owners’ undivided shares shrink only upon partition; no deemed donation by them.
- Trusts & Foundations – Contribution to a private foundation is a gift; but if foundation later appoints donor as trustee with full control, BIR may re-characterize as incomplete donation → donor’s tax due only upon completion.
- Advance Legitime – Donations to compulsory heirs are generally advance legitimes; still subject to donor’s tax. They will be collated at probate, but donor’s tax paid now is creditable neither against estate tax nor inheritance shares.
- Documentation for Marital Consent – Absence of the other spouse’s signature in ACP/CPG donations makes the deed void (FC Art. 96) → no valid transfer, no donor’s tax, but DST still assessed until judicial annulment.
10. Important Jurisprudence
| Case | G.R. No. | Doctrine |
|---|---|---|
| Commissioner v. Suyoc Consolidated Mining (30 Apr 1968) | L-25689 | Donor’s tax attaches at execution, not acceptance, but must still prove acceptance for validity. |
| Vda. de Medina v. Collector (5 May 1958) | L-10620 | Donation of conjugal property without wife’s consent is void → no donor’s tax assessable. |
| Abello v. CIR (90 OG 5286) | – | Partition among heirs is not donation; but any excess share voluntarily assigned is taxable gift. |
| CIR v. Heirs of Crisanta Vda. de Echavez (18 Jan 2022) | G.R. 239646 | Clarified that “stranger gifts” concept became academic after TRAIN. |
| Aboitiz Power Corp. v. CIR (20 Oct 2020) | G.R. 217492 | Defined “net gift” and explained deductions for assumed liabilities. |
11. Checklist for Practitioners
- Identify every donor (each co-owner, each spouse).
- Compute each donor’s net gift separately.
- Confirm marital regime & consent for spouses.
- Secure updated zonal & RPT values as of the donation date.
- Document encumbrances (loan statements) if deducting debts.
- Prepare BIR Form 1800 + eCAR before title transfer.
- Calendar donations to leverage the ₱250k annual exemption.
- Advise on DST; donor & donee may stipulate who bears it, but BIR can collect from either.
- Keep records for at least 10 years (Sec. 235, extended if tax-free gift relied on NGO exemptions).
- Watch for anti-graft rules if donors are public officials (RA 6713; donation may be prohibited).
12. Conclusion
When dealing with jointly-owned property, donor’s tax liability in the Philippines hinges on individual ownership shares. Post-TRAIN, the computation is simpler (flat 6 %), yet practitioners must still navigate: marital property rules, co-ownership formalities, valuation nuances, and tight 30-day filing deadlines. Careful structuring—especially staging gifts and maximizing statutory exemptions—can legally minimize tax while ensuring smooth transfer of title. Always memorialize consent, acceptance, and valuation to withstand a future BIR audit or estate settlement.