Estate Tax Obligations on Property After a Spouse’s Death (Philippines)

This article explains, in practical detail, what happens to property and what taxes are due when a spouse passes away in the Philippines. It reflects the rules under the National Internal Revenue Code (NIRC), as amended (including the TRAIN law), the Family Code/Civil Code on property relations, and common BIR practice. Laws and forms change—always check the latest BIR issuances for edge cases.

1) What the estate tax is—and when it applies

Estate tax is a tax on the transfer of the decedent’s property at death, not a tax on the heirs’ receipt.
It is imposed on the net estate (gross assets minus allowable deductions) of the deceased, whether the settlement is by will (testate) or without a will (intestate).
Standard rate: a single 6% estate tax on the net estate.
Who files/pays: the executor/administrator if there is one; otherwise, any heir can file on behalf of the estate.
Filing deadline: within one (1) year from the date of death. The BIR may grant extensions (see §9).

2) First things first: identify the property regime and the decedent’s share

Estate tax is computed only on the decedent’s share of the conjugal/community property plus any property that was exclusively his/her own.

Default marital property regimes

Married on/after 3 Aug 1988 (Family Code) Default: Absolute Community of Property (ACP) unless spouses opted out by marriage settlement. → All property owned before and acquired during the marriage (with narrow exceptions like exclusive property by gratuitous title with stipulation) generally forms part of the community.
Married before 3 Aug 1988 (Civil Code) Default: Conjugal Partnership of Gains (CPG) unless otherwise agreed. → Each spouse’s capital/exclusive property remains theirs; fruits/profits and properties acquired for value during the marriage are conjugal.

At death, the property relations are dissolved and liquidated:

Inventory the community/conjugal assets and liabilities.
Settle obligations chargeable to the community.
Split the net community—½ to the surviving spouse (this is not subject to estate tax), ½ to the decedent (this enters the estate).
Add the decedent’s exclusive properties, if any.

Tip: On the BIR Estate Tax Return, you’ll see a specific line for the “Share of Surviving Spouse.” That amount is excluded from the decedent’s estate.

3) What goes into the gross estate

For citizens and resident aliens, the gross estate is worldwide—real, personal, tangible, and intangible property wherever located. For a non-resident alien, only property situated in the Philippines is included (see situs rules below).

Common inclusions

Real property (house & lot, condominium, land—valued at fair market value at the time of death). For BIR, use the higher of: (a) BIR zonal value or (b) assessor’s FMV on the date of death.
Personal property: vehicles, jewelry, artwork, etc. (FMV at death).
Bank deposits, investments, receivables.
Shares of stock:
- Listed: quoted price at date of death.
- Unlisted common: typically net asset value based on the latest acceptable FS.
- Unlisted preferred: often par value (check the articles/terms).
Proceeds of life insurance:
- Included if the estate is the beneficiary or if the beneficiary is revocable.
- Excluded if payable to a beneficiary irrevocably designated.

Situs (where property is “located” for estate tax)

Real property: where the property is located.
Tangible personal property: where physically located.
Intangible personal property (e.g., shares in Philippine corporations, bank deposits in Philippine banks, franchises exercisable here) are Philippine-situs.
- Reciprocity rule may exempt a non-resident alien’s Philippine intangibles if their country does not impose estate/transfer tax on similar intangibles of Filipinos, or grants equivalent exemption to Filipinos.

4) Allowable deductions (to arrive at the net estate)

The TRAIN reforms simplified deductions but kept key reliefs:

Standard deduction: ₱5,000,000 (no substantiation of actual expense amount is needed beyond proving the death and estate).
Family home deduction: up to ₱10,000,000.
- The “family home” is the dwelling where the decedent and family habitually resided.
- Only the portion included in the estate is deductible (e.g., if the family home is conjugal and the decedent’s ½ share worth ₱6M is in the gross estate, the family home deduction for that property is ₱6M, capped at ₱10M overall).
Claims against the estate (valid, enforceable debts contracted in good faith for “money or money’s worth” and existing at death), unpaid mortgages/indebtedness, with documentary proof (e.g., notarized loan documents, statements, proof of use, and in some cases withholding/transfer proof if to a related party).
Losses incurred during settlement not compensated by insurance (subject to timing rules).
Transfers for public use (to the Government or political subdivisions).
Property previously taxed (“vanishing deduction”)—for property received by the decedent by gift or inheritance within 5 years prior to death that was already subjected to donor’s/estate tax; the deduction “vanishes” over time by percentage.
Share of the surviving spouse in the community/conjugal property (a structural deduction—see §2).

Note: Prior itemized deductions like medical and funeral caps under pre-TRAIN rules were removed. The standard deduction and family home are now the main universal reliefs, with claims/debts still allowed if proven.

5) Quick example (illustrative only)

Couple married in 1995 (ACP). Husband dies 1 June 2025.
Community assets (FMV at death):
- Family home (house & lot): ₱8,000,000
- Vacant lot: ₱6,000,000
- Bank deposits: ₱3,000,000 Total community: ₱17,000,000
Community liabilities: Housing loan balance: ₱1,000,000
Decedent’s exclusive property: vintage car ₱2,000,000

Step A — Liquidate the community: Community net = ₱17,000,000 − ₱1,000,000 = ₱16,000,000 Decedent’s ½ share = ₱8,000,000 (this goes into the estate) Surviving spouse’s ½ = ₱8,000,000 (excluded)

Step B — Add decedent’s exclusive property: Gross estate = ₱8,000,000 + ₱2,000,000 = ₱10,000,000

Step C — Deductions:

Standard deduction = ₱5,000,000
Family home deduction = ₱4,000,000 (decedent’s ½ share of the ₱8M family home)
Claims/mortgage already netted at Step A (proper treatment is to charge community liabilities before splitting; do not deduct again)

Net estate = ₱10,000,000 − ₱5,000,000 − ₱4,000,000 = ₱1,000,000 Estate tax @ 6% = ₱60,000

(If the family home were larger—say, decedent’s share ₱6M—the deduction would still be capped at the actual share but never more than ₱10M overall.)

6) Filing, forms, and timing

Return: BIR Form 1801 (Estate Tax Return).
When: Within one (1) year from death.
Where: RDO having jurisdiction over the decedent’s last residence, or as directed by the BIR.
TIN of the Estate: Obtain a separate TIN (often via BIR Form 1904 for one-time taxpayers) to file/pay and to hold post-death income.
Extensions:
- BIR may grant extension to pay for meritorious cases (e.g., illiquidity), up to 5 years if judicially settled, or up to 2 years if extrajudicial—usually with interest.
- Limited extension to file may also be granted on valid grounds; apply before the due date and keep approvals in writing.

Documentary attachments (typical set; exact list varies)

Certified Death Certificate; valid IDs.
Proof of relationship (marriage certificate, birth certificates of heirs).
Schedule and valuation documents for assets:
- Real property: Transfer Certificate of Title/Condo Cert., updated Tax Declaration, zonal value printout/assessor certifications.
- Bank accounts: bank certifications of balances as of date of death.
- Shares: stock certificates, corporate secretary’s valuation certification and audited FS (for unlisted), broker certification/market quotes (for listed).
- Personal property: appraisal reports, purchase documents.
Debts/claims: notarized loan documents, statements of account, proof of utilization, and other BIR-required substantiation.
If judicial: letters of administration/executor’s appointment, relevant court orders.
If extrajudicial: Extrajudicial Settlement deed (Rule 74), proof of publication (once a week for 3 consecutive weeks), and, if there are creditors/minors, compliance with bond/guardianship rules as applicable.

7) Bank accounts of the decedent

Banks typically freeze accounts upon notice of death.
Under current practice, withdrawals may be allowed subject to withholding/escrow rules (commonly a 6% withholding treated as creditable against the final estate tax), or up to a small de minimis amount without BIR clearance under certain regulations. Policies vary; coordinate with the bank and the RDO.
The withheld amount is reconciled when the estate tax is finally computed in the return.

8) Getting property out of the estate: the eCAR and transfers

After review and payment, the BIR issues an electronic Certificate Authorizing Registration (eCAR)—one per property class/title.
You need the eCAR to:
- Transfer real property titles at the Registry of Deeds;
- Reissue stock certificates to heirs;
- Change ownership of vehicles with LTO, etc.
For real property, the Registry and LGU Treasurer will also look for updated Real Property Tax (RPT) and may impose transfer tax/registration fees. (These are separate from the estate tax.)

9) Penalties, interest, and extensions

Late filing/payment incurs surcharge (generally 25%; 50% for willful neglect or fraudulent return) plus interest (the NIRC pegs it to double the legal rate per BSP guidance) computed from due date until full payment.
Extensions to pay (see §6) don’t erase interest—they just stop compromise/collection actions while you pay under the approved schedule.

10) Special situations you should know about

Renunciation/waiver by an heir
- A pure and simple renunciation of inheritance in favor of the co-heirs in general (i.e., the heir simply refuses their share) is not subject to donor’s tax.
- A renunciation in favor of a specific person (or for consideration) is treated as a donation/sale and can trigger donor’s tax (or income tax/DST for a sale).
Non-resident decedent
- Only Philippine-situs property enters the gross estate; reciprocity may exempt intangibles (see §3).
Life insurance
- Irrevocable beneficiaries → proceeds excluded from the estate.
- Revocable or estate/executor as beneficiary → included.
Trusts and usufructs
- Interests that revert or transfer at death can be part of the gross estate, depending on retained powers and timing.
Usual “basis” for heirs
- Heirs generally step up to the FMV at date of death as their cost basis. If they later sell real property, the sale is subject to 6% capital gains tax (CGT) on the higher of gross selling price or zonal/assessed FMV (plus DST/transfer fees).
- For listed shares, sales go through the exchange with stock transaction tax; for unlisted shares, CGT/regular income tax rules apply depending on share type and seller.

11) Income taxes of the estate during administration

The estate is a separate taxpayer while under administration/settlement.
Income earned after death (e.g., rent, interest) is reported in the estate’s income tax return (estates/trusts return) until distribution. Appropriate withholding may apply.

12) Practical checklist

Secure the estate’s TIN and identify the correct RDO.
Inventory assets and liabilities; determine property regime; compute the decedent’s share.
Gather valuation proofs as of date of death (real property FMVs, bank balances, share valuations).
Compile deduction evidence (debts, mortgages, vanishing deduction histories).
Draft and file BIR Form 1801 within one year; request extension early if needed.
Pay estate tax (or apply for extension to pay with security, if applicable).
Obtain eCAR(s).
Proceed to title transfers (Registry of Deeds/LTO/corporate secretary) and settle LGU fees/RPT.
If the estate will earn income during settlement, file the estate’s ITR annually until closed.

13) Frequent pitfalls (and how to avoid them)

Using the wrong values (e.g., not using the higher of zonal vs assessor’s FMV for land/house).
Forgetting the family home deduction or misapplying it to a property that wasn’t actually the family home.
Double-deducting community debts—remember they are charged to the community before splitting; don’t deduct them again after computing the decedent’s ½.
Weak debt substantiation (missing notarized agreements, unclear proof of proceeds/use).
Bank withdrawals made without understanding withholding and crediting at final computation.
Late filing while waiting for a probate decree—file on time based on best available valuations; you can amend later if needed.
Renunciation errors creating donor’s tax exposure.

14) Legal hooks (for orientation)

NIRC (Tax Code) provisions on estate tax, deductions, reciprocity for intangibles, filing/payment, penalties, and extensions (as amended by TRAIN and later issuances).
Family Code/Civil Code on property relations (ACP/CPG), liquidation at dissolution (death), and the surviving spouse’s share.
Rules of Court, Rule 74 on Extrajudicial Settlement (including publication and bond where applicable).

Bottom line

When a spouse dies, only the decedent’s share of the community/conjugal property (plus exclusive assets) enters the estate. Compute accurate FMVs at death, apply the ₱5M standard deduction, family home deduction up to ₱10M, and other allowable deductions, then apply the 6% rate. File within one year, get the eCAR, and complete transfers. Handle bank withdrawals correctly, document debts rigorously, and beware of renunciations that accidentally trigger donor’s tax.

If you want, I can turn this into a fill-in-the-blanks worksheet for your specific situation (assets, debts, documents, deadlines) so you can compute and track everything cleanly.