Estate Tax on an Inherited Share From a Deceased Sibling

(Philippine law, updated to 30 April 2025)

Estate tax is a tax on the privilege of transmitting a decedent’s property to his or her heirs. It is assessed on the net estate as a single, indivisible tax before the property is distributed; heirs do not pay the tax in their personal capacities, but they cannot validly receive (or later register, sell, or mortgage) their shares until the tax is settled.

1. Statutory Foundations

Source	Key Provisions
National Internal Revenue Code (NIRC), as last amended by R.A. 10963 (“TRAIN Law”, 2018)	• Flat 6 % estate-tax rate on the net estate • Standard deduction ₱5 million • ₱10 million deduction for the family home
R.A. 11213 (“Estate-Tax Amnesty Act”, 2019), extended by R.A. 11569 and BIR RR 6-2023	• 6 % amnesty rate on net taxable estate or fair market value (FMV) of undeclared property—whichever is higher • Covers deaths 31 Dec 2021 or earlier • Deadline to file amnesty return: 14 June 2025
Civil Code (Book III, Title IV)	Intestate-succession order: descendants → parents → surviving spouse → siblings and collateral relatives
Rules of Court, Rule 74	Extrajudicial settlement by heirs when there is no will, no debts, and all heirs are of age or duly represented

2. When Does a Brother or Sister Inherit?

There is a will (testate succession).
• A decedent may freely give property to brothers or sisters after the legitimes of compulsory heirs (if any) are reserved.
There is no will (intestate succession).
• Siblings inherit only if the decedent left no descendants, legitimate parents, or surviving spouse (Civil Code Art. 1001).
• Full-blood siblings take double the share of half-blood siblings.

3. Determining the Gross Estate

Property Type	How Valued	Common Issues
Real property	Higher of (a) BIR zonal value, or (b) assessed FMV in municipal assessor’s schedule, as of date of death	Often two values differ; always attach both certifications.
Personal property (cash, deposits, vehicles, jewelry, etc.)	FMV on date of death	Bank certification must state balance at death plus accrued interest.
Shares of stock	Listed shares – closing price on date of death; Unlisted – book value per last audited FS	For closely-held corporations, get CPA certificate and board resolution.
Life-insurance proceeds	Exempt if irrevocably designated beneficiary; otherwise included.	Verify policy designation.

4. Net-Estate Computation (Post-TRAIN)

Gross estate
Minus allowable deductions (Sec. 86, NIRC):
- Standard deduction – ₱ 5 million
- Family-home deduction – FMV up to ₱ 10 million
- Funeral expenses – actual, not > ₱ 200,000 or 5 % of gross estate
- Judicial expenses – probate, executor’s fees, etc.
- Debts and obligations – duly proved and contracted in good faith
- Unpaid taxes due from decedent
- Medical expenses – incurred within one (1) year prior to death, not > ₱ 500,000
- Transfers for public use
- Casualty losses incurred within one (1) year prior to death and not compensated by insurance
Equals Net Estate
Estate-tax due = 6 % × Net Estate

Tip: If the estate is worth ≤ ₱ 5 million and the family home is the only real property (≤ ₱ 10 million), the net estate may be zero—no estate-tax liability, only the filing of the return.

5. Filing and Paying the Tax

Step	Details
1. Obtain Taxpayer Identification Numbers (TINs)	For the estate (apply for TIN-estate) and for each heir.
2. File BIR Form 1801 (“Estate-Tax Return”)	• Within one (1) year from date of death. • Request extensions: up to 30-day filing extension; payment in installment for 2 years (administrative) or 5 years (if estate is under court settlement) with BIR approval.
3. Attach supporting documents	Death certificate, notarized extra-judicial settlement or court order, list of properties with valuations, proofs of deductions, schedule of partition, photocopies of titles, bank certifications, etc.
4. Pay	Over-the-counter at AABs, eFPS/e-Payment facilities, or via cash bonds/ surety bond if installment.
5. Secure Electronic Certificate Authorizing Registration (eCAR)	Issued per property. Required by Registry of Deeds, LRA, Land Transportation Office, banks, and corporate secretaries before transfer or release.

6. Estate-Tax Amnesty (for deaths on or before 31 Dec 2021)

Feature	Rule
Rate	6 % of net estate OR 6 % of FMV of undeclared asset, whichever is higher
Minimum tax	₱ 5,000
Penalties/interest	Waived
Effect	Immunity from civil, criminal, and administrative cases under the Tax Code, plus issuance of eCAR
Deadline	14 June 2025 (hard deadline, no further extension announced as of 30 Apr 2025)
Limitations	Does not cover properties involved in pending cases under the PCGG, AMLA, or tax-evasion suits.

7. Penalties for Late or Non-Payment (Ordinary Regime)

Violation	Add-Ons
Late filing	25 % surcharge on basic tax
Willful neglect or fraudulent return	50 % surcharge
Interest	Double the legal interest rate (currently 12 % p.a.) counted from original due date until full payment
Criminal liability	Fine of ₱ 10,000 – ₱ 100,000 and/or imprisonment 1–5 years (Sec. 255, NIRC)

8. Practical Example

Scenario: Mario (single, no children, parents deceased) dies on 15 Jan 2025, leaving:
• Residential lot & house (FMV ₱ 6 million)
• Bank deposit ₱ 800,000
• Car ₱ 400,000 FMV
He is survived by two full-blood sisters, Ana and Beth. Funeral expenses amounted to ₱ 180,000; medical bills for last illness ₱ 300,000. No debts.

Computation	Amount (₱)
Gross estate	Lot & house 6,000,000 + Bank 800,000 + Car 400,000 = 7,200,000
Less deductions	• Standard 5,000,000 • Family home 1,200,000 (only the excess above 5 M is taxable) • Funeral 180,000 (≤ 200k) • Medical 300,000 (≤ 500k)
Total deductions	6,680,000
Net estate	7,200,000 − 6,680,000 = 520,000
Estate-tax due (6 %)	₱ 31,200
Heirs’ shares (after tax)	Each sister receives 260,000 plus half of the real-property equity, as agreed in the settlement.

9. Frequently Overlooked Issues for Sibling Heirs

Co-ownership exists until partition – Each heir’s undivided share can be sold or mortgaged only after the estate is settled and titles are transferred.
Bank freeze – Under BSP rules, a depositor’s accounts are frozen up to ₱ 20,000; amounts beyond this require a BIR clearance before withdrawal.
Capital-gains tax vs. donor’s tax – When heirs later divide inherited property differently from their pro-rata shares, unequal transfers may be considered taxable donations.
Foreign property and dual citizenship – Philippine citizens are taxed on worldwide property; resident-alien siblings may have treaty relief.
Half-blood vs. full-blood – Always document parentage; titles sometimes omit middle names, leading to disputes.

10. Summary Checklist for an Heir-Sibling

Secure death certificate and decedent’s TIN.
Inventory assets & liabilities with date-of-death valuations.
Decide on settlement: extrajudicial (if allowed) or probate.
Compute estate tax and prepare BIR Form 1801 with all attachments.
File and pay within one (1) year (or evaluate amnesty eligibility).
Obtain eCARs and transfer titles, shares, vehicles, and deposits.
File capital-gains or donor’s tax returns, if needed, on subsequent redistributions or sales.

Concluding Note

For Filipino siblings inheriting from a brother or sister, estate-tax compliance is mechanical but unforgiving. Missing the one-year deadline can multiply a modest tax into a crippling liability—and can bar you from selling or even occupying property you rightfully own. Conversely, the flat 6 % rate and generous deductions under the TRAIN Law mean that, with timely filing and complete documentation, many sibling-settled estates incur little or no tax. If doubts remain—especially regarding inter-family transfers, foreign assets, or the amnesty window—consult both a tax professional and a succession lawyer to avoid irreversible penalties.

(This article is for general information only and is not a substitute for formal legal advice.)