How Many Percent Is Estate Tax—and What You Need to Know

1) What “estate tax” is (and why it matters for real property)

In the Philippines, estate tax is a national tax imposed on the right to transfer property at death (not a local “real property tax”). When a person dies, everything they own (and certain transfers deemed part of the estate) is gathered into a gross estate, reduced by allowable exclusions/deductions, resulting in a net estate. The estate tax is computed on that net estate.

For heirs, estate tax is crucial because land titles, condominium titles, and other registrable rights generally cannot be transferred to heirs without BIR clearance (commonly through an eCAR—electronic Certificate Authorizing Registration) after filing and paying the estate tax.

2) The estate tax rate in the Philippines (the headline answer)

Under the current framework introduced by the TRAIN reforms (effective 2018), the estate tax rate is:

✅ 6% of the NET ESTATE That is: Estate Tax = 6% × (Gross Estate − Allowable Deductions/Exclusions)

So if the question is “How many percent is estate tax?” the answer is 6%—but it is not 6% of the land’s selling price, and not automatically 6% of the total properties. It is 6% of the net estate after the proper computation.

3) Real property inside the “gross estate”: what gets included

Real property commonly included in a decedent’s gross estate includes:

Land (titled or untitled interests, including rights/claims)
Condominium units
Buildings and improvements attached to land
Rights over property (easements, usufruct, beneficial ownership, etc., depending on the facts)
Inherited property the decedent already owned at death
The decedent’s share in co-owned property

Also important: the Tax Code can include certain transfers made before death if they have characteristics that make them “substitutes” for testamentary transfers (e.g., certain retained-control or revocable transfers). The exact treatment depends on the instrument and the retained rights.

4) Valuation of real property for estate tax: the “higher of” rule

A core issue for Philippine real property estate tax is valuation.

For real property, the fair market value (FMV) for estate tax purposes is generally the higher of:

The BIR zonal value (FMV determined by the Commissioner/BIR), and
The FMV per the assessor’s valuation (often reflected in the tax declaration / schedule of values).

This “higher of” rule is why heirs often discover that the tax base can be driven by zonal value even if the property is not actually being sold.

Date of valuation: FMV is determined as of the date of death.

5) Net estate: key exclusions and deductions that often matter for real property estates

The 6% rate applies only after getting to the net estate, which means knowing what can be excluded/deducted.

A. Exclusions (common examples)

Share of the surviving spouse: In conjugal/community regimes, only the decedent’s share belongs to the gross estate (the spouse’s share is not “deducted”; it is excluded because it was never solely the decedent’s).
Properties the decedent did not own beneficially at death (fact-specific).

B. Deductions (common examples; documentation-heavy)

The Tax Code (as amended) provides deductions for citizens/residents that commonly include items like:

Standard deduction (a fixed amount allowed without substantiation beyond basic estate filing requirements)
Family home deduction (up to a statutory cap; requires proof the property qualifies as a family home and valuation support)
Claims against the estate (valid debts of the decedent, properly substantiated)
Unpaid mortgages/encumbrances on property (to the extent allowed and properly documented)
Taxes and certain charges accrued and unpaid (subject to rules)
Losses incurred during settlement (subject to conditions)
Certain transfers for public use / to the government (subject to conditions)

Because the deductible items and caps are statutory and can be technical, estates with significant real property often benefit from a careful “paper trail” review (loan documents, notarized instruments, receipts, certifications, tax declarations, etc.).

6) Resident vs non-resident decedent: what real property is covered

Resident citizens and resident aliens: generally taxed on worldwide estate (including foreign properties), subject to applicable rules and reliefs.
Non-resident aliens: generally taxed only on property situated in the Philippines. Philippine real property is considered situs in the Philippines, so it is typically within the Philippine gross estate.

Intangible property for non-residents can involve reciprocity rules; real property does not.

7) Filing the Estate Tax Return: deadlines and practical requirements

Estate tax compliance is not just a computation; it is a procedure.

A. Return to file

Typically filed using BIR Form 1801 (Estate Tax Return), with required attachments (vary by case), such as:

Death certificate
Taxpayer/estate identification details
Inventory of properties (with supporting documents)
Tax declarations and/or zonal valuation references for real property
Titles (TCT/CCT), if available
Proof of deductions (loan statements, notarized debt instruments, receipts, etc.)
Extra-judicial settlement documents, if any (or court documents for judicial settlement)

B. Deadline

Under the post-TRAIN framework, the estate tax return is generally due within one (1) year from the date of death, with limited extension mechanisms depending on circumstances and approvals.

(Deadlines and administrative requirements can be affected by later BIR issuances and special laws; for an actual filing, always verify the current BIR rules applicable to the RDO handling the estate.)

8) Paying the estate tax: cash-flow tools for “land-rich, cash-poor” estates

Real property estates often face a practical problem: the estate is valuable on paper but illiquid.

The Tax Code allows, in appropriate cases and subject to conditions, extensions of time to pay (often discussed in terms of:

Longer periods when settlement is under court supervision, and
Shorter periods for extra-judicial settlements)

Interest may accrue, and the approval process is documentation-driven. This is often a make-or-break issue for estates where heirs need time to sell or refinance property to fund the tax.

9) Penalties for late filing or late payment

Failure to file/pay on time can lead to:

Surcharges
Interest (at the statutory rate, which is tied to legal interest benchmarks under tax law and may change over time)
Compromise penalties (in certain cases)

Even if heirs eventually pay, the “cost of delay” can become substantial—especially when the property cannot be transferred and transactions are blocked.

10) Estate tax vs other taxes involving real property (don’t confuse these)

Estate tax is often paid alongside (or followed by) other taxes/fees in the transfer process:

Estate tax (national): 6% of net estate
Local transfer tax (local government): imposed by LGUs on transfer of real property (rates vary by city/municipality/province)
Documentary Stamp Tax (DST): may arise depending on the instrument and transaction structure
Registration fees: Register of Deeds
Real property tax (RPT): annual local tax; delinquent RPT can block processing in practice

Estate tax is not a substitute for these.

11) How the tax connects to transferring the title (common workflow)

A typical real-property inheritance transfer path looks like:

Settle the estate (extra-judicial settlement among heirs or judicial settlement in court)
Prepare estate tax filing package (property list + valuation + deductions)
File Estate Tax Return and pay (or secure approved installment/extension, where applicable)
Secure eCAR from the BIR
Pay LGU transfer tax, if required by the LGU for registration
Register with Register of Deeds to issue new title(s) to heirs
Update tax declaration with the assessor’s office

12) Practical points and common pitfalls for Philippine real property estates

Valuation surprises: zonal values can be higher than expectations.
Wrong marital property assumptions: misclassifying conjugal/community vs exclusive property can overstate the estate.
Unsubstantiated deductions: claims and debts are frequently disallowed if paperwork is weak.
Heir disputes: delays increase penalties and can freeze the property’s marketability.
Untitled land / imperfect titles: adds complexity; estate tax may still apply to rights/interests.

13) Quick FAQ

Is estate tax 6% of the property value? Not exactly. It’s 6% of the net estate, which may include multiple properties and other assets, less allowable deductions/exclusions. Real property is valued using the higher of zonal value and assessor’s valuation (generally).

If the only asset is a family home, is there still estate tax? Possibly none—if the net estate becomes zero after the standard deduction, family home deduction (if qualified), and other allowable deductions/exclusions. But you still typically need to file and secure BIR clearance to transfer title.

Can we transfer title without paying estate tax? As a rule, registries require BIR clearance (eCAR), which presupposes proper estate tax compliance.

14) Bottom line

Estate tax rate (Philippines): 6%
Applied to the net estate, not automatically to the selling price or the gross value of land
For real property, the tax base is driven by statutory valuation rules (commonly the higher of zonal value and assessor’s valuation) and by whether deductions/exclusions are properly supported.

If you want, I can also provide a step-by-step sample computation (with numbers) for a typical estate that includes a house-and-lot, plus the usual deductions, so you can see how the 6% actually plays out.