Estate Tax & Property Transfer Upon a Parent’s Death in the Philippines
A practitioner-oriented guide updated to 18 July 2025
1. Legal Foundations
| Source | Key Sections / Issuances | What They Cover |
|---|---|---|
| National Internal Revenue Code (NIRC) of 1997 (as last amended by RA 10963 – TRAIN, 1 Jan 2018) | §§ 84-97 | Definition of gross estate, deductions, filing duties, rates, liens, powers of the BIR |
| RA 11213 (Estate Tax Amnesty Act, effectivity → 14 June 2019) + RA 11569 & RA 11956 (extensions to 14 June 2025) | Entire act + BIR RR No. 6-2019, 17-2021, 3-2023 | One-time 6 % amnesty and simplified requirements for deaths on or before 31 Dec 2021 |
| Rule 74, Rules of Court | Extrajudicial settlement of estates | |
| Civil Code (Book III) | Succession rules (testate, intestate, legitimes) | |
| BIR Regulations & Rulings | RR 12-2018, RMC 62-2018, RMC 23-2021, RR 11-2021 (eCAR automation), etc. | |
| Local Government Code of 1991 | Local Transfer Tax (≤ 0.75 % of FMV/zonali value) | |
| Land Registration Act & PD 1529 | Issuance of new TCT/CCT transferring title to heirs | |
| SEC-Memorandum Circulars | Estate transfer of shares in closely-held corporations |
Amnesty status: As of 14 June 2025 the estate-tax amnesty period lapsed. Congress has bills to reopen it, but none is in force (July 2025). Plan on the regular TRAIN-law rules unless a new extension is enacted.
2. When Does Estate Tax Arise?
- Taxable Event: Death of a person who owned property (resident or citizen → worldwide assets; non-resident alien → Philippine-situs assets).
- Taxpayer: The estate as a separate juridical entity (TIN starts with “3”); liability enforced on the executor/administrator or, if none, any heir to the extent of inherited property.
- Lien: The estate tax constitutes a lien on every property of the decedent, superior to subsequent liens and can be enforced even after title transfer if unpaid.
3. Computing the Estate Tax (Regular Regime)
Determine Gross Estate (fair-market values at date of death)
- Real property: Higher of BIR zonal value or assessor’s fair-market value.
- Personal property: Actual or book value (stocks = FMV per latest audited FS or book value for non-listed).
- Inclusions: Transfers in contemplation of death, transfers with retained life interest, revocable transfers, proceeds of life-insurance if the beneficiary is the estate or insurance is revocable, usufructs, etc.
Deduct Allowable Deductions (TRAIN, § 86)
Type Resident/ Citizen Non-Resident Standard Deduction ₱ 5,000,000 ₱ 500,000 Family Home Up to ₱ 10,000,000 FMV Not allowed Deductions for debts, funeral expenses (actual but ≤ 5 % of gross estate, max ₱ 200,000), medical expenses (last year of life, ≤ ₱ 500,000), vanishing deduction, net share of surviving spouse, losses, transfers for public use, etc. Yes Pro-rated according to Philippine-situs ratio Net Estate × 6 % (single, flat rate) No systems of brackets after 1 Jan 2018.
Penalties if late
- 25 % surcharge (or 50 % for willful neglect/false return)
- 12 % annual interest (diminishing) applied to unpaid tax.
4. Estate Tax Amnesty (Deaths ≤ 31 Dec 2021)
| Feature | Regular TRAIN | Amnesty (RA 11213 ± extensions) |
|---|---|---|
| Rate | 6 % of net estate | 6 % of net or gross (treated similarly); no penalties/interest |
| Deductibles | As listed above | Optional: pay 6 % on net (with deductions) or 6 % on undeclared FMV if documents incomplete |
| Returns | BIR Form 1801 (Estate Tax Return, eFPS/eBIR) | BIR Form 2118-E (Amnesty Return) + Acceptance Payment Form |
| Deadline | Within 1 year from death (extendable 6 months) | Last day was 14 June 2025 |
| Outputs | eCAR (Estate) enabling title transfer | Certificate of Availment (CAEA) + eCAR |
If the decedent died after 31 Dec 2021 or you missed the amnesty deadline, you must use the regular 6 % regime.
5. Filing & Payment Timeline
| Step | Deadline / Prescriptive Period |
|---|---|
| Secure TIN of the Estate | Before filing return |
| File & Pay BIR Form 1801 | 1 year from death (exception: amnesty) |
| Optional Installment (§ 92 NIRC) | If BIR is satisfied that payment in one lump sum imposes undue hardship → may allow payment by installment within 2 years from due date; CA/ROR on property remains until full payment |
| Judicial Probate (if contested will or minor heirs) | No statutory deadline, but estate tax return still due within 1 year |
| Prescription for BIR assessment | 10 years if no return/false return; 3 years if valid return filed |
| Prescription for collection | 5 years from assessment |
6. Settlement of Estate
Extrajudicial Settlement (EJS) – Allowed if:
- No will, or will adjudicates entire estate;
- No outstanding debts OR debts fully paid;
- All heirs are of legal age, or minors represented. Procedure:
- Draft “Deed of Extrajudicial Settlement of Estate With Waiver/Partition” (DES) or “EJS with Sale”.
- Notarize; publish once a week for 3 consecutive weeks in a newspaper of general circulation.
- Pay estate (and other) taxes, obtain eCAR.
- Pay Documentary Stamp Tax (₱ 15/ ₱ 20 per ₱ 1,000 for non-sale; 1.5 % CGT for sale of realty by estate).
- Pay Transfer Tax at Treasurer’s Office (≤ 0.75 %).
- Register deed + eCAR with Registry of Deeds; new TCT/CCT issued in heirs’ names.
Judicial Settlement / Probate – Filed in RTC/MTC (estate ≤ ₱ 300 k). Court issues letters testamentary/administration; approval of project of partition; follows same BIR steps for eCAR issuance.
Small Estate Settlement (Rule 74 § 2, estates ≤ ₱ 10,000) – Affidavit of Self-Adjudication; similar publication.
7. BIR Documentary Checklist (Common)
| Category | Frequently Required Evidence |
|---|---|
| Death | PSA-certified death certificate |
| Identity / Heirship | PSA birth/baptismal certificates, marriage cert., IDs |
| Real Property | Certified true copy of TCT/CCT, latest tax declaration, real-property tax clearance, subdivision/condo plan if needed |
| Personal Property | Bank certifications of balances; stock certificates & latest AFS; vehicle OR/CR |
| Debts & Expenses | Medical receipts, funeral invoices, creditor affidavits |
| Estate tax return | Form 1801 + computation sheets; Sworn Declaration of No Liability (if estate ≤ ₱ 5 M and purely EJS & residential) |
| Others | SPA or Secretary’s Certificate, BIR clearance of executor, proof of publication (EJS) |
Tip: Ungrouped documents are the most common cause of eCAR rejection—follow BIR checklists strictly.
8. Transfer of Title in the Registry of Deeds
Present:
- Original owner’s duplicate TCT/CCT;
- eCAR + tax clearance;
- Deed of settlement/partition;
- Transfer tax receipt;
- BIR-stamped DST return.
Annotate estate tax lien release (if already fully paid).
RD issues new certificate(s) of title in the names of heirs, or consolidated title in co-ownership form.
Subdivision/Condominium amendments need LRA approval and BIR clearance for each derived lot/unit.
9. Special Topics & Pitfalls
| Scenario | Key Rules / Reminders |
|---|---|
| Co-owned family home > ₱ 10 M | Excess FMV forms part of net estate; only up to ₱ 10 M deduction |
| Life insurance paying directly to designated heir | Excludible if designation is irrevocable & proceeds paid to beneficiary, not to estate |
| Foreign assets of Filipino decedent | If taxed abroad, claim Foreign Estate Tax Credit (§ 86 E) but capped by proportion formula |
| Agrarian reform-covered land | CARP retention limit (5 ha) still applies to heirs; DAR clearance needed before RD transfer |
| Debt deduction | Must be duly notarized debt instrument if ≥ ₱ 250 k and contracted within 3 years before death; else disallowed |
| Donation mortis causa disguised as sale | BIR will re-classify and impose estate tax |
| Sale by heirs prior to partition | Estate (as seller) owes 6 % Capital Gains Tax (CGT) on real property plus DST; purchasers demand eCAR from estate |
| Separate ITR for Estate | Estate with gross income > ₱ 250 k post-death must file Annual Income Tax Return (BIR Form 1701-A) until distribution complete |
| Free Patents / Torrens titling pending | Title must be generated first in decedent’s name to anchor eCAR issuance |
| Amnesty missed | Pay 6 % regular plus 25 % surcharge + 12 % annual interest from original deadline, unless Congress reenacts amnesty. |
10. Planning Strategies (While Parent Is Alive)
- Lifetime Donations – 6 % donor’s tax per transfer; donor keeps control over timing but watch out for legitime.
- Formation of Holding Corporation / Family Trust – transfer property to a corporation (CGT & DST trigger) then pass shares via donation (6 %) or estate (6 %); offers centralised management and ease of fractional ownership.
- Buy Insurance – Insurance proceeds received by irrevocable individual beneficiaries escape estate tax, providing liquidity.
- Consolidate Debts – Legitimate debts reduce the taxable estate; make sure instruments are notarized and interest bona fide.
- Pre-mortem Partition – Settlement by inter vivos partition with waiver of collation; still donor’s tax but may minimise emotional disputes.
11. Step-by-Step Checklist After a Parent’s Death
- Within 1 week → Get PSA death certificate, freeze bank accounts (Bank Secrecy lifted upon BIR clearance).
- Month 1-2 → Inventory all assets & liabilities; apply for estate TIN; decide on EJS vs probate.
- Month 3-4 → Secure title documents, tax declarations, bank certifications, loan statements; draft deed of settlement.
- Month 5-8 → File BIR Form 1801 (or Amnesty Return if still available) and pay estate tax; obtain eCAR.
- Month 9-12 → Pay LGU transfer tax, DST (if any), and register with RD/SEC/LTO; transfer possession to heirs.
- Ongoing until distribution → File estate’s annual ITR if it earns income; dissolve estate once property is fully transferred.
12. Frequently Asked Questions
| Q | A |
|---|---|
| Can the BIR refuse to issue eCAR if siblings are fighting? | Yes. If there is adverse claim or pending court case, BIR requires court approval or compromise agreement before releasing eCAR. |
| Is publication still needed if the estate is settled by “Waiver of Rights” only? | Yes—any extrajudicial settlement, even if no partition, must be published for 3 weeks to protect creditors. |
| What if one heir lives abroad? | They may execute a Consularized Special Power of Attorney authorizing a local attorney-in-fact to sign deeds and BIR forms. |
| Are retirement benefits subject to estate tax? | Government GSIS & SSS death benefits are generally exempt; private retirement benefits depend on plan—check if exempt under § 32 B(6)(b). |
| Can estate tax be paid with property-in-kind? | Yes, BIR may accept payment in kind (e.g., shares, realty) under § 91 but only upon approval of the Commissioner and DOF—rare in practice. |
13. Post-2025 Legislative Watch
- House Bill 9962 / Senate Bill 3079 (pending Jul 2025): propose permanent 6 % amnesty and optional graduated estate tax table.
- Digitalization: Full transition to eCAR-TIS and mandatory electronic filing for estates > ₱ 20 M expected by 2026.
- ESOS (Electronic Settlement of Small Estates) pilot: would waive publication and notarial fees for estates ≤ ₱ 1 M.
14. Key Takeaways
- Six-percent flat rate—whether under TRAIN (post-2018) or amnesty—makes estate planning easier but documentation remains complex.
- Deadline discipline is crucial: 1-year filing window or, if amnesty applies, cut-off dates. Once missed, surcharges and interest snowball.
- eCAR is the golden ticket; without it, Registry of Deeds, LTO, SEC, banks will not register or release assets.
- Estate exists as a separate taxpayer until final distribution—do not forget to file its income tax returns if it earns rent, dividends, or bank interest.
- Consult a tax lawyer or CPA for computations and a notary public experienced in estates for deeds; mistakes often cost more than professional fees.
(This article is for general information only and does not constitute legal advice. Laws and regulations may change after 18 July 2025; always verify with the latest BIR issuances and official gazettes.)