Estate Tax Payment Requirements for Inherited Property in the Philippines (2025 Edition)
1. Overview
Estate tax is a transfer tax imposed on the right of a decedent to transmit property at death. Liability arises the moment of death, and settlement is a condition precedent to transferring any title—whether real, personal, tangible, or intangible—to the heirs. Philippine estate tax rules are found primarily in:
| Source | Key Citations | Highlights |
|---|---|---|
| National Internal Revenue Code (NIRC) of 1997, as last amended by the TRAIN Law (R.A. 10963, 2018) & CREATE Law (R.A. 11534, 2021) | NIRC, Title III, Ch. I, §§84-97 | Single 6 % rate; standard deductions; filing rules |
| Estate Tax Amnesty Act (R.A. 11213, 2019) as extended by R.A. 11569 (2021) and R.A. 11956 (2023) | Amnesty period ends 14 June 2025 | Reduced 6 % on net estate or P5,000 whichever higher, waiver of penalties |
| Implementing Regulations & BIR Issuances | e.g., RR 12-2018, RR 17-2021, RMCs 73-2022, 21-2024 | Documentary checklists; e-CAR automation; eONETT portal |
2. Who Must File & Pay
| Scenario | Responsible Party |
|---|---|
| Individual estate | Executor or Administrator (if appointed) |
| No executor/administrator | The heir in possession or any legal heir jointly and severally |
| Non-resident decedents with Philippine assets | Philippine-based executor/administrator; absent that, the resident heir |
All heirs are subsidiarily liable for unpaid estate tax up to the value of the property they respectively receive (NIRC §93).
3. Tax Base: The Net Estate
Gross estate
- Resident citizen/decedent: all properties worldwide.
- Non-resident alien: only Philippine-situs properties (NIRC §104).
Allowable deductions (TRAIN Law thresholds, unchanged for 2025):
| Deduction | Ceiling / Rule |
|---|---|
| Standard deduction | ₱5 million (automatic, no substantiation) |
| Family home | Up to ₱10 million (FMV; excess part of gross estate) |
| Funeral expenses | Lower of 5 % of gross estate or ₱200,000 |
| Medical expenses incurred within one year prior to death | Up to ₱500,000 |
| Claims against the estate | Valid, enforceable debts outstanding at death |
| Claims against insolvent persons | Entire amount unpaid |
| Transfers for public use | Actual amount |
| Vanishing deduction | For property previously taxed (NIRC §86[E]) |
| RA 4917 retirement benefits | Exempt |
| Shares listed and traded on the PSE | Already subject to stock transaction tax → exclude from gross estate |
Special case: Conjugal/community property Only the decedent’s one-half share is includible.
- Net estate = Gross estate − Deductions → Taxed at 6 %.
4. Computation & Illustration (simplified)
| Item | Amount (₱) |
|---|---|
| Land & improvements (Philippines) | 20,000,000 |
| Bank deposits | 2,000,000 |
| Listed shares (PSE) | 1,000,000 |
| Gross estate | 23,000,000 |
| Less deductions | |
| • Standard | (5,000,000) |
| • Family home | (10,000,000) |
| • Funeral (cap) | (200,000) |
| Net estate | 7,800,000 |
| Estate tax @ 6 % | 468,000 |
5. Filing & Payment Timelines
| Step | Ordinary Rule | Pandemic / Calamity Relief (if BIR issues) |
|---|---|---|
| Estate Tax Return (BIR Form 1801) | Within 1 year from death (NIRC §90) | Extension possible under §91 for meritorious reasons |
| Payment of tax | On or before filing date (“pay-as-you-file”) | Installment over 2 years, w/ 6-month intervals, when insufficient cash and tax > property value × → requires BIR approval |
| Venue | eONETT portal or manually at the RDO where decedent was domiciled; non-resident: RDO 39 (South Quezon City) |
Late filing → 25 % surcharge; late payment → 12 % p.a. interest (NIRC §248 & §249).
6. Documentary Requirements (Core Set)
| Category | Key Documents |
|---|---|
| Personal | PSA-issued death certificate; Taxpayer Identification Numbers (TIN) of estate & heirs; Notarized SPA if representative |
| Asset-Specific | TCT/OCT/CCT certified true copies + latest Tax Declaration; bank certification of balances (date of death); stock certificates & latest Financial Statements (for close corporations) |
| Deductions | ORs & invoices (medical, funeral); promissory notes; latest audited FS of insolvent debtors |
| Valuation & Others | Statement of computation; notarized Affidavit of Self-Adjudication or Extra-Judicial Settlement (EJS); CAR request; if availing amnesty—BIR Form 2118-EA |
7. Electronic Processing Milestones (2023-2025)
- eONETT (One-Time Transactions) – mandatory nationwide since July 2024 for Metro Manila, Luzon, Visayas, and Mindanao; supports online Form 1801 filing, payment via e-FPS/GCash/LandBank Link.Biz, and CAR monitoring.
- e-CAR generation – RMC 21-2024 requires RDOs to print Certificate Authorizing Registration with QR code; no manual CAR after 31 December 2024.
- Automated Estate Tax Installment Plan (A-ETIP) – pilot in 2025; heirs can schedule post-dated electronic payments.
8. Estate Tax Amnesty Window (Final Year)
| Feature | Amnesty Terms (R.A. 11956) |
|---|---|
| Coverage | Estates of decedents who died on/before 31 May 2022 with unpaid estate tax |
| Rate | 6 % of net estate or ₱5,000 per decedent, whichever is higher |
| Penalties & interest | 100 % waived |
| Deadline | 14 June 2025 (non-extendible) |
| Installment | Up to 2 years without interest |
| Post-amnesty benefit | Immunities from further BIR assessment & civil/criminal cases on the covered estate tax liabilities |
Strategic tip: For multi-generation unsettled estates, file cascade amnesty returns per decedent to cleanse all titles before the cut-off.
9. Estate Freezing & Release Rules
- Bank Deposit Freeze – Section 97 of the NIRC: banks must withhold 6 % estate tax on net withdrawals within one year from death or until e-CAR is presented.
- Real Property Transfer – Registry of Deeds will not annotate transfers without e-CAR & proof of payment of “Transfer Tax” (Local Government Code, §135).
- Corporate Shares – A corporation cannot record transfer on its stock & transfer book absent e-CAR.
10. Penalties for Non-Compliance
| Violation | Statutory Basis | Sanction |
|---|---|---|
| Failure to file/pay within 1 year | NIRC §§248-249 | 25 % surcharge + 12 % p.a. interest |
| Willful attempt to evade | §255 | Fine ₱500k–₱10 M + imprisonment 6–10 years |
| Fraudulent documents | §257 | Fine ₱1 M–₱50 M + imprisonment 2–10 years |
| Bank officers ignoring freeze | §97 | Secondary liability & administrative sanctions |
11. Special Topics & 2025 Fringe Updates
| Topic | 2025 Context |
|---|---|
| Digital Assets (e-wallets, crypto, NFTs) | BIR RMC 8-2024 treats them as intangible personal property; include appraised FMV at death; obtain platform certificate. |
| Overseas Filipino Workers (OFWs) | Foreign real estate is part of gross estate of resident decedent; however, treaty relief may allow foreign tax credit (NIRC §86[C]). |
| Same-Sex Spouses | No legal “spouse” status under Family Code; estate passes as “co-heirs” → less favorable legitime shares; but deductions & 6 % rate apply the same. |
| Estate-Planning Trusts | Revocable trusts are includible; irrevocable trusts may escape estate tax if bona fide and not transferrable back. |
| Valuation of Family Home post-TRAIN | Still capped at ₱10 M even with 2025 FMV surge; excess taxable. |
| Barangay Micro-Business Enterprises (BMBE) shares | Still subject; BMBE incentives do not exempt estate transfers. |
12. Practical Compliance Road-Map
- Secure TIN for the Estate of the Late John Doe.
- Gather documents within three months—banks freeze can hamper liquidity.
- Compute preliminary estate tax; decide if amnesty is available/beneficial.
- Open estate bank account; place needed cash (can be from heir advances).
- File Form 1801 via eONETT or RDO; pay tax electronically or over the counter.
- Track e-CAR issuance; follow-up every 15 days.
- Transfer titles at Registry of Deeds, LRA, and corporate secretary within 60 days from e-CAR to avoid extra local transfer taxes.
- File capital gains & DST (if EJS apportions property to heirs unequally) within 30 days of notarization.
13. Checklist: Common Pitfalls to Avoid
- Missing the 1-year deadline—most costly mistake; interest accrues daily.
- Ignoring small assets (e.g., GCash, PayMaya balances) that later block e-CAR.
- Overstating deductions without substantiation; BIR can recompute and impose surcharges.
- Failing to update zonal values—use the higher of BIR zonal value or tax declaration FMV at death.
- Co-heir withdrawals from joint accounts post-death without withholding.
- Executing EJS before paying estate tax; causes double registration work.
14. Key Takeaways for 2025
- Flat 6 % rate remains—simple to compute but strict in documentation.
- Estate Tax Amnesty ends 14 June 2025—last chance to purge decades-old unpaid estates.
- End-to-end digitalization (eONETT, e-CAR) makes compliance faster but less forgiving of data errors.
- Installment flexibility exists, but interest clock starts after first missed installment.
- Failure to settle = frozen assets + no title transfers, so prompt attention is economically rational.
Disclaimer
This article summarizes laws and regulations effective June 13, 2025. It is for general information only and not a substitute for specific legal or tax advice. Consult a Philippine lawyer or a BIR-accredited tax practitioner for matters relating to your estate.
Need help planning or filing? Feel free to ask follow-up questions—happy to walk you through computations or document preparation.