Estate Tax on Property After a Spouse’s Death in the Philippines

This is a practical, lawyerly explainer on what happens to property and tax when a spouse dies in the Philippines. It synthesizes the current framework of the Civil Code/Family Code and the National Internal Revenue Code (NIRC) as amended by the TRAIN Law. It’s for general information only and isn’t legal advice. Rules change, and the BIR may issue new regulations—verify details for your case with counsel or the BIR.

1) What is estate tax (and what it is not)?

Estate tax is a tax on the transfer of the decedent’s estate at death, not a tax on individual properties or on the heirs personally.
Flat rate: 6% of the net taxable estate (after allowable deductions).
Paid to the Bureau of Internal Revenue (BIR); proof of payment is the (e)CAR (Electronic Certificate Authorizing Registration), which you need to retitle properties.

2) Which assets are included?

By residency/citizenship

Resident citizens / resident aliens: worldwide assets are included.
Non-resident aliens: only Philippine-situs property is included. There’s also a reciprocity exemption for intangible property (e.g., shares, bank deposits) if the decedent’s country gives a similar exemption to Filipinos.

Typical properties

Real property (land/condo/house): valued at whichever is higher of (a) BIR zonal value or (b) the LGU assessor’s fair market value, as of date of death.
Personal property: cars (book/fair value), jewelry (appraised), appliances, art.
Financial assets: bank deposits (principal plus earned interest to date of death), time deposits, bonds, shares (listed shares at closing market price on date of death; unlisted common shares at book value from the latest audited financial statements; unlisted preferred shares at par value unless otherwise provided).
Business interests / partnerships / sole proprietorships: net equity value as of date of death.
Insurance: if the decedent retained the power to designate or change the beneficiary, proceeds are generally includible; otherwise typically excluded.

3) First big legal step: determine the property regime of the marriage

This matters because the surviving spouse’s share is not subject to estate tax—only the decedent’s share is.

Absolute Community of Property (ACP) (default for marriages under the Family Code, i.e., generally after 3 Aug 1988 unless spouses agreed otherwise) Almost everything owned at marriage and acquired during marriage is community property, except property acquired by exclusive donation/inheritance to one spouse (with proper stipulation), personal effects for exclusive use (except jewelry), and property excluded by law.
Conjugal Partnership of Gains (CPG) (default under the old Civil Code for many marriages before 3 Aug 1988 unless agreed otherwise) Fruits/income and properties acquired for value during marriage are conjugal; properties owned before marriage remain exclusive.
Separation of property Each spouse owns and manages their own estate.

When a spouse dies, the community/partnership dissolves. You must:

List all community/conjugal assets and obligations as of date of death.
Pay community/conjugal obligations (or account for them).
Split the net remainder: 50% to the surviving spouse (not taxable), 50% to the decedent’s estate (tax base), plus any exclusive properties of the decedent.

4) Deductions that reduce the tax base

From the decedent’s gross estate, you subtract allowable deductions to arrive at the net taxable estate:

Standard deduction: ₱5,000,000 (no substantiation beyond proof of death/Heirship docs, but check BIR attachments).
Family home deduction: up to ₱10,000,000 Deductible only to the extent of the decedent’s interest. If the family home is community property worth ₱10M, the decedent’s 50% interest is ₱5M; the deduction is ₱5M (not ₱10M).
Claims against the estate / unpaid mortgages / taxes (properly documented, bona fide, and existing as of death). Special proof is required for loans, especially those contracted within three years before death (e.g., notarized debt instrument, proof of use of proceeds).
Losses (arising from casualty or theft not compensated by insurance, within statutory rules).
Property previously taxed (“vanishing deduction”) when the decedent received property by donation or inheritance within the last 5 years and corresponding donor’s/estate tax was paid. The deduction fades with time (highest if transfer was very recent).
Transfers for public use / qualified charitable bequests (to the Government for public purposes or to accredited institutions, subject to legal requirements).
Share of the surviving spouse (SSS deduction): This isn’t listed as a “deduction” in forms if you’ve first carved out the spouse’s 50% before you build the gross estate. Either way, the surviving spouse’s half of the community is never taxed.

Notably removed by TRAIN: the old itemized medical and funeral expense ceilings. The standard deduction now replaces those minor itemized allowances.

5) Filing, deadlines, extensions, and penalties

Return: BIR Form 1801 (Estate Tax Return).
TIN of the Estate: get via BIR Form 1904.
Deadline: within 1 year from date of death.
Extensions:
- Filing: BIR may grant a brief filing extension for meritorious reasons.
- Payment: BIR may grant installment/extension up to 2 years (extrajudicial settlement) or up to 5 years (judicial settlement), upon showing that payment on time would impose undue hardship.
Penalties:
- Surcharge of 25% (or 50% for willful neglect/false return) plus deficiency/delinquency interest (tied to the statutory/legal interest rate) from due date until paid.
Notice of death: The old “Notice of Death within 60 days” requirement was removed by TRAIN; focus instead on timely filing/paying the estate tax return.

6) The (e)CAR and transferring titles

You cannot retitle real property, vehicles, or company shares without proof of estate tax compliance.

General sequence:

Gather documents: death certificate, marriage certificate, birth certificates of heirs, IDs/TINs, titles, tax declarations, latest real property tax receipts, bank certifications, stock certificates/corp certifications, loan documents, audited FS (for unlisted shares), etc.
Settle the estate:
- With a will: Probate in court is required to give effect to the will.
- Without a will and all heirs are of age and agree: Extrajudicial Settlement under Rule 74 (requires a public instrument, bond if there are debts, and publication once a week for three consecutive weeks in a newspaper of general circulation).
- If a minor heir exists, expect guardianship/court involvement.
File and pay estate tax and secure the (e)CAR from the BIR.
Register transfers at the Registry of Deeds (for land/condo), LTO (for vehicles), corporate secretary/stock & transfer book (for shares), and update LGU tax declarations. Expect registration fees, possible documentary stamp tax on certain instruments, and local transfer taxes (LGU).

Bank withdrawals: Banks may release funds from the decedent’s accounts before the eCAR if they withhold 6%, which is creditable against the final estate tax. Procedures vary—coordinate with the bank and secure the proper BIR form acknowledging creditable withholding.

7) Special issues when spouses co-owned the property

Community/conjugal property: Only the decedent’s net half (after settling community debts) enters the estate. The surviving spouse’s half is not part of the estate and not taxable.
Exclusive property: Property exclusively owned by the decedent (e.g., inherited with exclusive stipulation) is fully includible in the estate.
Family home: Often community; you still only bring the decedent’s share into the estate and you may claim the family home deduction (up to ₱10M limited to the decedent’s interest).
Mortgages: Avoid double counting—if you already netted community obligations to compute the surviving spouse’s and decedent’s halves, don’t deduct the same mortgage again in the estate return.

8) Succession mechanics (why they matter for paperwork)

Compulsory heirs generally include: legitimate/legitimated/adopted children, illegitimate children (with statutory shares), and the surviving spouse. They are entitled to legitime (a reserved minimum) under the Civil Code.
Renunciation vs. assignment by an heir:
- A pure, general renunciation in favor of all co-heirs as part of partition is not a donation (no donor’s tax).
- A waiver in favor of a specific person (not a general renunciation) is typically treated as a donation and may be subject to donor’s tax.

9) Foreign assets and foreign estate tax credit

For resident citizens/resident aliens with assets abroad:

The Philippines taxes worldwide estate.
You may claim a foreign estate tax credit for transfer taxes paid to a foreign country on foreign-situs property, subject to per-country and overall limits (you cannot credit more than the portion of Philippine estate tax attributable to those foreign assets). Keep official foreign tax documents; you’ll need them for the BIR.

10) Worked examples (step-by-step)

Example A (modest estate; no tax due)

Married under ACP.
As of death, community assets (FMV):
- Family home: ₱10,000,000
- Lot: ₱5,000,000
- Bank deposits: ₱1,000,000
- Total community assets: ₱10,000,000 + ₱5,000,000 + ₱1,000,000 = ₱16,000,000
Community obligation: mortgage ₱2,000,000

Compute community net: ₱16,000,000 − ₱2,000,000 = ₱14,000,000 Split 50/50:

Surviving spouse share (not taxable): ₱7,000,000
Decedent’s share (enters estate): ₱7,000,000
Decedent’s exclusive property: ₱0 Gross estate: ₱7,000,000

Deductions:

Standard deduction: ₱5,000,000
Family home deduction (decedent’s 50%): ₱5,000,000 (capped at ₱10,000,000; here 50% of ₱10M = ₱5M)

But remember: we already only brought the decedent’s half (₱7M) into the gross estate. So actual allowable family home deduction is limited to what’s in the gross estate after the standard deduction. You cannot push the taxable base below zero.

Net taxable estate: ₱7,000,000 − ₱5,000,000 − (up to) ₱2,000,000 = ₱0 Estate tax at 6%: ₱0

Practical note: BIR will apply the deductions in the correct order and cap them so you don’t produce a negative estate. Outcome here is no estate tax.

Example B (larger estate; tax due)

Married under ACP.
Community assets (FMV):
- Family home: ₱12,000,000
- Other community property: ₱18,000,000
- Total: ₱12,000,000 + ₱18,000,000 = ₱30,000,000
Community obligation: ₱4,000,000
Decedent’s exclusive property: ₱5,000,000

Community net: ₱30,000,000 − ₱4,000,000 = ₱26,000,000 Decedent’s half: ₱13,000,000 Gross estate: ₱13,000,000 + ₱5,000,000 = ₱18,000,000

Deductions:

Standard deduction: ₱5,000,000
Family home deduction (decedent’s 50% of ₱12,000,000 = ₱6,000,000, below the ₱10M cap): ₱6,000,000

Net taxable estate: ₱18,000,000 − ₱5,000,000 − ₱6,000,000 = ₱7,000,000

Estate tax (6%): 0.06 × ₱7,000,000 = ₱420,000

11) Practical filing checklist (typical)

BIR Form 1801 (Estate Tax Return), with computations/schedules.
Death certificate; marriage certificate; birth certificates of heirs.
TINs of heirs and Estate TIN (Form 1904).
Extrajudicial Settlement (if applicable) + proof of publication and bond (or court orders if judicial/probate).
Titles/deeds; tax declarations; updated real property tax receipts.
Valuations: assessor certifications; BIR zonal values; bank certifications (balances as of date of death and account type); stock certificates; corporate secretary’s certs; latest audited financial statements for unlisted shares; appraisals (if used).
Debt documents: notarized loan agreements, statements of use, and proof of proceeds when needed.
Receipts for any donor’s/estate tax previously paid (for vanishing deduction).
Proof of payment of estate tax and (e)CAR issuance request.

12) Frequent pitfalls (and how to avoid them)

Skipping the community/partnership accounting. Always determine the property regime and carve out the surviving spouse’s share correctly.
Double-deducting mortgages. If you netted them out to split the community, don’t deduct again in the estate schedules.
Wrong valuation date. Use date-of-death values.
Family home deduction overreach. Limit to the decedent’s interest, capped at ₱10M.
Bank withdrawals without tax coordination. Work with the bank on the 6% creditable withholding and keep the BIR certificate for crediting.
Renunciation errors. A targeted renunciation in favor of a specific person is usually a donation (donor’s tax risk). Keep renunciations general to co-heirs if the goal is to avoid donor’s tax.
Foreign assets documentation. If you’ll claim foreign estate tax credits, secure official receipts/assessments and follow the per-country/overall limit computations.

13) After the (e)CAR: registering property

Real property: present the (e)CAR, extrajudicial settlement/court order, owner’s duplicate title, tax clearances to the Registry of Deeds; then update assessor and treasurer (local transfer tax and other LGU fees may apply).
Vehicles: process with LTO (decedent to heirs), paying transfer and registration fees.
Shares: deliver the (e)CAR and instruments to the corporate secretary to update the stock & transfer book.

Later sale by heirs: Estate settlements are not subject to capital gains tax; but if heirs sell capital assets later, CGT/IT and DST may apply at that time.

14) Amnesty note (historical context)

There was an Estate Tax Amnesty law allowing settlement of past-due estates at preferential terms and without penalties/surcharges, later extended by subsequent legislation and regulations. Coverage windows and deadlines have changed over time. If you are dealing with old, unsettled estates, ask the BIR or counsel whether any current relief still applies to your fact pattern.

15) Quick answers to common questions

Is the surviving spouse automatically the owner of everything? No. The spouse owns their 50% share of the net community plus whatever they inherit from the decedent under succession rules.
Can we transfer title without paying estate tax? No. The (e)CAR is required for registration/retitling.
Do we need probate if there’s a will? Yes—probate is required to give the will legal effect (but the estate tax return may still be filed within the deadline based on the will’s terms).
What if we can’t pay all at once? Apply for payment extension/installments (up to 2 years extrajudicial / 5 years judicial), with supporting financial statements and justification.
Do small estates pay tax? Many modest estates end up zero-tax because of the ₱5M standard deduction and family home deduction (up to the decedent’s share capped at ₱10M), but you still need to file and obtain the (e)CAR.

16) Action plan (if a spouse has just passed)

Identify the property regime (ACP/CPG/separation).
Inventory assets and obligations as of date of death (include valuations).
Decide on probate (if there’s a will) or extrajudicial settlement (if intestate and all heirs agree and are of age).
Get an Estate TIN, prepare BIR Form 1801, claim allowable deductions, and file within one year.
Seek extensions early if cash is tight; coordinate with the bank for any 6% creditable withholding on withdrawals.
After payment, secure the (e)CAR and retitle assets with the proper registries.

If you’d like, tell me your marriage regime, a rough asset/loan list, and the family home value, and I can draft a custom computation worksheet you can take to the BIR or your lawyer.