How to Donate a House and Lot in the Philippines: Deed of Donation and Taxes

Updated for post-TRAIN rules (general guidance only; consult your notary or tax counsel for your specific facts).

1) What “donating” real property means

A donation is a gratuitous transfer of ownership from the donor to the donee who accepts it during the donor’s lifetime. When the property is immovable (e.g., a house and lot), strict formalities apply. Donations inter vivos are immediately effective upon proper execution and acceptance, unlike testamentary transfers (via will), which take effect at death and are governed by estate law.

2) Who may donate and receive

  • Donor: Any person with capacity to contract and to dispose of property. If the house and lot is conjugal/community property, both spouses must consent. If exclusive/paraphernal, the owning spouse alone may donate (but see limits below).

  • Donee: Any person not disqualified by law.

    • Foreigners generally cannot own land in the Philippines. A donation of land to a foreign individual is void. (They may own condominium units subject to the Condominium Act’s 40% foreign-ownership cap and other conditions.)
    • Spouses to each other: Donations between spouses during marriage are void (save for moderate customary gifts on family occasions).
    • Persons living together as adulterers/concubines: Donations between them are void.
    • Minors or those under disability: A legal representative accepts on their behalf.

3) Formal validity: how to execute a Deed of Donation

For real property, the Civil Code requires:

  1. Public instrument (notarized). The Deed of Donation must:

    • Adequately describe the property (TCT/CCT number, lot/block, area, location).
    • State the approximate value.
    • State any conditions (e.g., right of usufruct reserved by donor, use restrictions, reversion on breach, etc.).

  2. Acceptance by the donee:

    • Must be in the same notarized instrument or in a separate notarized instrument.
    • If separate, the donor must be notified in a public instrument, and that fact should be noted.

  3. Capacity & consents:

    • If community/conjugal property, both spouses sign. If only one signs, the donation is void as to the non-consenting spouse’s share.
    • If the donor reserves a real right (e.g., usufruct), describe it clearly.
    • If the donee is a minor, the legal guardian accepts.

  4. No unlawful cause or object and no impairment of legitime (see §8).

Tip: Attach certified copies of the latest TCT/CCT, Tax Declarations (land and improvements), a lot plan/vicinity map, and ID/TIN documents to streamline BIR processing.

4) Typical documentary package

  • Notarized Deed of Donation with acceptance (and acknowledgment/notification if acceptance is in a separate deed)
  • Donor and donee TINs and government IDs
  • Owner’s duplicate title (TCT/CCT) – original for annotation later at the Registry of Deeds
  • Latest Tax Declarations (land and improvements), Real Property Tax (RPT) clearance, and Certificate of No Improvement (if applicable)
  • Zonal value printout and/or Assessor’s Fair Market Value (FMV) certification
  • Marriage/birth certificates if proving relationship (useful for civil-law issues, and occasionally requested administratively)
  • If mortgaged: mortgage documents and statement of outstanding balance (affects valuation)

5) Taxes and fees on a donation of real property

A. Donor’s Tax (national)

  • Rate: 6% of net gifts in excess of ₱250,000 per calendar year (TRAIN unified the rate regardless of relationship).

  • Tax base (for real property): Use the higher of (i) BIR zonal value or (ii) Assessor’s FMV at the time of donation.

  • Deductions from the gift’s value:

    • Encumbrances assumed by the donee (e.g., a mortgage the donee formally assumes) reduce the net gift.
    • The ₱250,000 annual exemption applies to the sum of all gifts made by the donor during the calendar year.

  • Filing & payment: File BIR Form 1800 and pay within 30 days from the date of donation.

  • Certificate Authorizing Registration (eCAR): For real property, the BIR issues an eCAR after processing; you’ll need this to transfer title at the Registry of Deeds.

Exemptions/Preferential cases:

  • Donations to the National Government, its agencies, or political subdivisions, and to certain accredited non-stock, non-profit, charitable/religious/educational institutions may be exempt (subject to strict qualification, accreditation, and the 30% administrative expense cap in the case of NGOs).
  • Transfers in contemplation of death are not donor’s tax—they fall under estate tax.

B. Documentary Stamp Tax (DST)

  • Instrument: The Deed of Donation of real property is generally subject to DST as a conveyance.
  • Base: The higher of zonal value or assessor’s FMV.
  • When due: On or before the 5th day of the month following the date the deed was notarized (BIR Form 2000).

C. Local Transfer Tax (provincial/city)

  • Imposed by the LGU on sale, barter, or donation of real property.
  • Typical rate: up to 0.5% of the tax base (often 0.75% in Metro Manila), computed on the same higher-of-value basis.
  • Deadline: Commonly within 60 days from notarization (check your LGU ordinance).

D. Registration fees and miscellaneous

  • Registry of Deeds fees (LRA schedule; value-based)
  • Assessor’s office fees (for issuance of new Tax Declarations)
  • Notarial fees

6) Valuation rules and examples

Valuation snapshot (the higher of):

  • BIR Zonal Value: per square meter × land area; plus
  • Assessor’s FMV: for land and separate FMV for improvements (house), if any.

Example 1: Simple unconditional donation

  • Higher-of-value for land + house: ₱5,000,000
  • No mortgage; no other gifts this year
  • Net gifts this year: ₱5,000,000 − ₱250,000 exemption = ₱4,750,000
  • Donor’s tax @ 6%: ₱285,000
  • DST: based on ₱5,000,000 (rate per current DST schedule)
  • Local transfer tax: LGU rate × ₱5,000,000

Example 2: Donation with mortgage assumed by donee

  • Higher-of-value: ₱6,000,000

  • Mortgage balance assumed: ₱2,000,000

  • Net gift: ₱6,000,000 − ₱2,000,000 − ₱250,000 = ₱3,750,000

  • Donor’s tax @ 6%: ₱225,000

    • Note: the assumed debt is treated as consideration and reduces the gratuitous portion.

Always compute per calendar year, aggregating all gifts to apply the ₱250,000 shield once.

7) Step-by-step: from drafting to new title

  1. Draft the Deed of Donation (with full property description, value, conditions, and an acceptance clause).
  2. Secure TINs for donor and donee (if none yet).
  3. Notarize the deed (and acceptance/notification if separate).
  4. Pay DST (BIR Form 2000) – due the month after notarization.
  5. File Donor’s Tax Return (BIR Form 1800) within 30 days of donation; submit required docs; pay 6% donor’s tax (if any).
  6. Obtain eCAR from the BIR.
  7. Pay Local Transfer Tax at the City/Municipal Treasurer within the prescribed period.
  8. Registry of Deeds: Present eCAR, owner’s duplicate title, tax clearances, and deed; pay registration fees; have the donation annotated and a new title issued in the donee’s name.
  9. Assessor’s Office: Cancel old Tax Declarations; issue new Tax Declarations for land and improvements in the donee’s name.
  10. RPT enrollment: Ensure the donee is billed for real property taxes going forward.

8) Civil-law limits and pitfalls (often missed)

  • Legitime protection: Donations inter vivos cannot impair the legitimes of compulsory heirs (spouse, legitimate/illegitimate children, ascendants). Excess donations may be reduced after the donor’s death.

  • Collation: Lifetime donations to heirs are generally brought into collation in a future estate settlement to ensure equalization and legitime compliance.

  • Conditions & reversion:

    • You may impose lawful conditions (e.g., “must keep property residential,” “no sale for 10 years,” “reverts to donor if used commercially”). Unlawful or impossible conditions are void.
    • Breach of a resolutory condition may allow revocation and reversion if properly drafted.

  • Revocation for ingratitude: Limited grounds (e.g., attempt on donor’s life, serious offenses against donor, unjust refusal to support). There are strict periods to sue.

  • Donations between spouses and illicit partners: Void (see §2).

  • Foreign donees: Land donations void; consider donating a condominium (subject to ownership caps) or donating shares of a corporation that owns land (but the corporation itself must remain at least 60% Filipino-owned).

9) Drafting guide: key clauses to include

  • Parties and capacity (marital status; property regime if married)
  • Property description (TCT/CCT number, area, technical description by reference, improvements)
  • Valuation (state the fair value used for taxes)
  • Nature of donation (pure or onerous/with condition; whether any mortgage is assumed)
  • Conditions/reservations (e.g., donor’s usufruct for life, right of reversion)
  • Delivery/possession (turnover of owner’s duplicate title, keys, etc.)
  • Warranties/encumbrances (hidden defects; liens)
  • Acceptance (by donee in same instrument; or separate deed + notified)
  • Spousal consent (if required)
  • Acknowledgment & notarization (Philippine form; with competent evidence of identity)
  • BIR & LGU compliance undertaking

10) Sample Deed of Donation (house and lot)

Note: This is a simplified template for educational purposes. Have your counsel adapt it to your facts and local registry/BIR preferences.

DEED OF DONATION (House and Lot)

KNOW ALL MEN BY THESE PRESENTS:

This DEED OF DONATION is made and executed this ___ day of __________ 20___, in __________, Philippines, by:

[DONOR’S NAME], of legal age, [single/married to __________ under the regime of __________], Filipino, with TIN __________, and residence at ______________________ (the “DONOR”),

in favor of

[DONEE’S NAME], of legal age, [single/married to __________], Filipino, with TIN __________, and residence at ______________________ (the “DONEE”).

WITNESSETH: That—

1. The DONOR is the registered owner of a parcel of land located at __________, covered by [TCT/CCT No. __________], more particularly described as follows: [insert description or reference to technical description], together with the residential house and all improvements thereon (collectively, the “PROPERTY”).

2. For and in consideration solely of liberality, the DONOR hereby voluntarily, freely, and irrevocably DONATES, CONVEYS, and TRANSFERS by way of donation inter vivos unto the DONEE, who accepts, the PROPERTY, including all rights, interests, and appurtenances.

3. The parties acknowledge the value of the PROPERTY for tax purposes to be ₱__________, being the higher of the BIR zonal value and the Assessor’s fair market value as of the date hereof.

4. [If applicable] The PROPERTY is subject to a real estate mortgage in favor of __________ with an outstanding balance of ₱__________, which the DONEE hereby assumes. The DONOR warrants that the mortgagee has been notified/consented where required.

5. [Optional conditions] This donation is subject to the following lawful conditions: (a) the DONOR retains a usufruct over the PROPERTY for life; (b) the PROPERTY shall be used exclusively for residential purposes; (c) in case of breach, ownership shall revert to the DONOR or his/her heirs.

6. The DONOR warrants lawful ownership and freedom from liens and encumbrances, except as disclosed.

7. Taxes and fees due on this donation shall be borne as follows: [allocation].

IN WITNESS WHEREOF, the parties have hereunto set their hands on the date and place first above written.

[Donor’s signature over printed name]
[Spousal consent if required]

[Donee’s signature over printed name]
ACCEPTANCE BY DONEE:

I, [DONEE], hereby ACCEPT the foregoing donation under the terms herein set forth.

[Donee’s signature over printed name]

ACKNOWLEDGMENT
[Standard Philippine notarization with competent evidence of identity block]

If the acceptance is in a separate instrument, prepare a “Deed of Acceptance of Donation,” notarize it, and deliver a notarized notice to the donor—attach proof of such notice to your BIR set.

11) Practical timelines & sequencing (no surprises)

  • Day 0: Notarize Deed (and acceptance).
  • By the 5th day of the following month: File/pay DST.
  • Within 30 days of donation: File/pay donor’s tax (Form 1800).
  • After BIR issues eCAR: Pay LGU transfer tax, then Register at RD, then Update Assessor.
  • Keep originals: Keep the eCAR, stamped returns, and official receipts—RD and Assessor will ask.

12) Common mistakes (and how to avoid them)

  • Missing acceptance/notification → donation void. Use same-instrument acceptance where possible.
  • Donating conjugal/community property without spousal consent → void as to the spouse’s share.
  • Donating land to a foreign national → void; consider alternatives (condo, shares in a Filipino-owned corporation).
  • Impairing legitime → donation is later reduced in estate proceedings.
  • Ignoring a subsisting mortgage → tax base miscomputed; eCAR delayed; lender objections.
  • Late filings → surcharge, interest (statutory rate), compromise penalties.
  • Conditions that are illegal or impossible → void condition (and sometimes the donation).

13) Alternatives to a straight donation

  • Donation with reserved usufruct (keep rights to use/receive fruits while transferring naked ownership).
  • Donation with reversion (property reverts on breach or pre-agreed events).
  • Estate planning tools (wills, life insurance, splits among heirs respecting legitimes).
  • Corporate/condo structuring (when foreign participation or multiple heirs are involved).

14) Quick compliance checklist

  • Parties have capacity; no legal prohibitions apply
  • Correct property regime assessed; spousal consent included if needed
  • Deed describes property and value; donee acceptance included
  • Notarization proper; IDs and TINs ready
  • Zonal value/Assessor FMV obtained; tax base computed
  • DST filed/paid (Form 2000)
  • Donor’s tax filed/paid within 30 days (Form 1800)
  • eCAR received
  • LGU transfer tax paid within the period
  • Registry of Deeds: new TCT/CCT issued
  • Assessor: new Tax Declarations issued
  • RPT account updated to donee

15) Final notes

  • BIR documentary and procedural requirements can vary slightly by Revenue District Office; LGU transfer-tax rules vary by ordinance.
  • Keep tight paper trails and value certifications.
  • If there are compulsory heirs, run a legitime check before donating significant assets.
  • For complex cases (mortgaged property; foreign elements; multiple conditions), coordinate early with your notary, RDO, and the LGU to avoid surprises.

If you want, I can adapt the sample deed to your exact facts and draft the acceptance/notification language plus a filing checklist tailored to your RDO and LGU.

Disclaimer: This content is not legal advice and may involve AI assistance. Information may be inaccurate.

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