Estate Tax Rates for Transfer of Title to a Child in the Philippines

A comprehensive legal-practitioner’s guide (June 2025 edition)

1. Overview

In Philippine law, no real-property title passes from a deceased parent to a child until the estate tax has been paid and the Bureau of Internal Revenue (BIR) issues an electronic Certificate Authorizing Registration (eCAR). The governing statute is the National Internal Revenue Code (NIRC) of 1997, Titles III-IV (Estate and Donor’s Taxes), as last amended by Republic Act (RA) 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Law. Ancillary rules appear in BIR Revenue Regulations (RR) 12-2018, 17-2021, and later circulars, while administrative procedure is harmonised with the Land Registration Act and the Local Government Code.

2. Estate Tax in a Nutshell

Item	Post-TRAIN rule (in force since 1 Jan 2018)
Taxable event	Death of the decedent (parent)
Rate	Flat 6 % of the net estate
Standard deduction	₱5 million (automatic)
Family-home deduction	Up to ₱10 million (one residence only)
Personal exemptions abolished	Old graduated schedule (5 %-20 %) repealed
Estate tax return (BIR Form 1801)	File within 1 year from death (extendible for “hardship”)
Payment	On filing; may be paid in 2-year instalments (up to 5 years if the estate is illiquid)
Penalties	25 % surcharge plus 12 % annual interest (or higher rate set by the Bangko Sentral)

Net estate = Gross estate (world-wide properties of a Filipino decedent) less allowable deductions:

Funeral expenses: 5 % of gross estate, capped at ₱200 000
Medical expenses for the year preceding death: capped at ₱500 000
Claims against the estate (validated debt)
Losses, unpaid mortgages, taxes, and casualty losses
Standard & family-home deductions (supra)
Vanishing deduction for property previously taxed within 5 years

If the net estate does not exceed ₱5 million, the tax due is zero, but filing is still mandatory to obtain the eCAR.

3. How Estate Tax Interacts With a Child’s Land Title

Settle the estate first. Even if there is only one child‐heir, title cannot be transferred by the Register of Deeds (RD) without the eCAR.
Modes of settlement
- Judicial (file petition for allowance of will or intestate settlement)
- Extra-Judicial Settlement (EJS) under Rule 74 Rules of Court (all heirs are of age or duly represented; no outstanding debts) – requires publication for three consecutive weeks.
Filing package at BIR Revenue District Office (RDO) having jurisdiction over the decedent’s domicile:
- BIR Form 1801 + sworn declaration of all properties
- Certified true copy of OCT/TCT, tax declaration, latest real-property tax receipt
- Birth certificates proving the child’s legitime and relationship
- EJS deed or court order
- Proof of payment or exemption
After eCAR – present to RD together with EJS deed/court order, original title, new tax declaration, and pay:
- Documentary Stamp Tax (DST) on conveyance: ₱15 for every ₱1 000 of higher between zonal value and fair-market value (Sec. 196 NIRC) – still due even if the estate itself is exempt.
- Transfer tax to LGU: Provinces 50 % of 1 % (i.e., 0.5 %), Cities/Metro Manila 75 % of 1 % (i.e., 0.75 %) of the property value.
- RD fees for registration, annotation, and issuance of new TCT in the child’s name.

4. Donor’s Tax: Lifetime Transfer to a Child as an Alternative

Parameter	Post-TRAIN rule
Taxable event	Donation or deed of donation that is “accepted” by the child while donor is alive
Rate	Flat 6 % of net gifts for the calendar year
Annual exemption	First ₱250 000 of total gifts of the year, per donor (not per donee)
Related taxes	DST (same schedule as deeds of sale) + LGU transfer tax + RD fees
Definition of “net gift”	FMV of property minus encumbrances assumed by donee
Filing	BIR Form 1800 within 30 days from notarisation of the deed
Payment	On filing; no instalment privilege

Tip: The 6 % donor’s tax often makes inter vivos transfers less expensive than dying with property still in the estate if the estate will exceed ₱5 million after deductions. However, for small estates (≤ ₱5 million net) a child can inherit tax-free upon death, making donation unnecessary.

5. Sale to a Child at Fair Market Value

A true sale is subject to:

Capital Gains Tax (CGT) – 6 % of the higher of gross selling price or zonal/FMV, payable by the seller.
DST – ₱15/₱1 000 on the same tax base.

If the “sale” price is below zonal value, BIR will treat the difference as a donation and impose donor’s tax in addition to CGT. Use an arm’s-length price or execute a clear deed of donation.

6. Estate Tax Amnesty (RA 11213, as extended)

Coverage: Estates of decedents who died on or before 31 May 2022 with or without previously issued assessments.
Rate: 6 % of net undeclared estate or 6 % of fair market value per property if there is no estate tax return.
Deadline: 14 June 2025 under RA 11956 (second extension).
Benefit: No penalties, interest, or surcharge; once paid, BIR issues eCAR.
Limitation: Amnesty does not cover donor’s tax deficiencies or properties of decedents who died after 31 May 2022.

7. Comparative Cost Snapshot (₱20 million family home; single child heir)

Mode	Tax base after deductions	National tax	Local/DST	Total (approx.)
Death (estate)	₱5 M standard + ₱10 M family-home deductions → Net = ₱5 M	6 % × ₱5 M = ₱300 000	DST ≈ ₱225 000; LGU ≈ ₱75 000	₱600 000
Donation (lifetime)	₱20 M – ₱250 k exemption = ₱19.75 M	6 % × ₱19.75 M = ₱1 185 000	DST ≈ ₱300 000; LGU ≈ ₱150 000	₱1.64 M
Sale at FMV	₱20 M	CGT 6 % = ₱1.2 M (seller)	DST ≈ ₱300 000; LGU ≈ ₱150 000	₱1.65 M

Assumptions: zonal value = selling price; property in a city.

8. Procedure in Detail

Secure estate documents: Death certificate, TIN of decedent & heirs, list of assets and liabilities.
Obtain certified copies: OCT/TCT, tax declarations from Assessor.
Prepare valuation: Request zonal values; have a licensed appraiser if needed for personal property.
Draft deed: EJS or deed of donation/sale.
Notarise & pay documentary stamp tax (within 5 days of notarisation for deeds of donation/sale).
File tax return (BIR Form 1801 or 1800/1706) at RDO; pay estate/donor’s/CGT.
BIR verification & issuance of eCAR (processing time 15-30 working days if complete).
Pay LGU transfer tax within 60 days of notarisation (donation/sale) or eCAR issuance (estate).
Register with RD: Submit eCAR, original title, tax clearance, new tax declaration, proof of payment of fees.
Release of new TCT/OCT in the child’s name and annotation of encumbrances, if any.

9. Special Cases

Scenario	Treatment
Non-resident Filipino decedent	Estate tax is still on worldwide estate; foreign tax credits may be claimed.
Non-resident alien decedent	Estate tax applies only to Philippine-situated properties; deductions limited to proportionate share.
Property under conjugal ownership	Only the decedent’s ½ share enters the gross estate; surviving spouse’s share is excluded.
Minor child	Title held in trust (Sec. 7 Rules on Trusts); guardian files on child’s behalf; no higher tax but RD annotates guardianship.
Life insurance proceeds	Excluded if beneficiary is irrevocably designated; otherwise part of gross estate.
Agricultural land subject to CARP	Value based on DAR appraisal; special transfer fees at RD; CGT exemption if contiguous/small farmer sale.

10. Estate Planning Strategies

Early partition through donation-cum-reserved usufruct – parents transfer bare title (6 % donor’s tax) but retain use and control; avoids estate congestion.
Holding company or family corporation – shares can be more flexibly divided; however, donation of shares still attracts the same 6 % donor’s tax plus DST on shares.
Life insurance equalisation – insure the parent for the value of the estate and name the child as irrevocable beneficiary; proceeds bypass estate tax.
Debt-push-down – legitimate loans secured by property reduce the net estate (interest must be substantiated).
Avail of the amnesty for unsettled estates of relatives who died ≤ 31 May 2022; settle ancestral titles before the 14 June 2025 deadline.

11. Common Pitfalls & How to Avoid Them

Late filing – surcharge and interest can double the liability; file even if you cannot pay in full (apply for instalment/payment plan).
Undeclared heirs – omitted illegitimate or adopted children can reopen the settlement and void the title.
Using a nominal sale price – BIR will recompute based on zonal values, causing donor’s-tax exposure plus penalties.
Paying LGU transfer tax before eCAR – some treasurers accept payment, but RD will refuse registration without eCAR; time-bar may lapse, leading to double payment.
Ignoring documentary requirements – missing proof of debts or medical expenses leads to disallowance of deductions, inflating the tax base.

12. Key Takeaways

Since 2018 the estate tax rate is a simple 6 %; with the generous ₱5 million standard deduction and ₱10 million family-home deduction, many middle-class estates pass to children tax-free.
Lifetime donations (also at 6 %) remain valuable where the estate will clearly exceed ₱5 million net, or where parents wish to see the transfer during their lifetime.
Capital-gains-taxable sales to children are usually costlier unless there is a genuine commercial reason.
The Estate Tax Amnesty (deadline 14 June 2025) is the last chance to clear long-dormant titles at a flat 6 % without penalties.
Proper documentation, punctual filing, and coordination with BIR, LGU, and RD are essential to secure the child’s new title and avoid future challenges.

This article reflects laws and regulations in force as of 8 June 2025. Readers should confirm whether later legislation, revenue regulations, or jurisprudence have modified any rule before acting on the information provided. For complex estates, consult a Philippine tax lawyer or certified public accountant experienced in estate settlement.