Estate Tax

• Estate tax is the tax on your right to transfer property at your death.
• The net estate of every decedent, whether resident or non-resident of the Philippines, as determined in accordance with the NIRC, shall be subject to an estate tax at the rate of six percent.
• It is a well-settled rule that estate taxation is governed by the statute in force at the time of death of the decedent.
• Composition of the Gross Estate

  1. Resident and citizens - all properties, real or personal, tangible or intangible, wherever situated.
  2. Non-resident aliens - only properties situated in the Philippines.
• Standard Deduction

  1. Resident Citizen - 5,000,000
  2. Non-resident Citizen - 500,000
• Claims against the estate - The word "claims" is generally construed to mean debts or demand of a pecuniary nature which could have been enforced against the deceased in his lifetime and could have been reduced to simple money judgments. Claims agaist the estate or indebtedness in respect of property may arise out of: (1) Contract; (2) Tort; or (3) Operation of Law.
• Claims of the deceased against insolvent persons as defined under R.A. 10142 and other existing laws, where the value of the decedent's interest therein is included in the value of the gross estate.
• Deductions

  1. Standard Deduction
  2. Claims against the estate
  3. Claims of the deceased against insolvent persons
  4. Unpaid mortgages, taxes and casualty losses
  5. Property previously taxed or Vanishing deduction
  6. Transfers for public use
  7. The Family Home
  8. Amount received by the heirs under Republic Act No. 4917
  9. Net share of the surviving spouse in the conjugal property
• Property previously taxed

  • an amount equal to the value specified below of any property forming part of teh gorss estate situated in the Philippines of any person who died within five years prior to the death of the decedent, or transferred to the decedent by gift within 5 years prior to his death, where such property can be identified as having been received by the decedent from the donor by gift, or from such prior decedent by gift, bequest, devise or inheritance, or which can be identified as having been acquired in exchange for property so received
• Transfers for public use

  • The amount of all bequests, legacies, devises or transfers to or for the use of the Government of the Republic of the Philippines or any political subdivision thereof, for exclusively public purposes.
• The Family Home

  • An amount equivalent to the current fair market value of the decedent's family home: Provided, however, that if the said current fair market value exceeds 10,000,000, the excess shall be subject to estate tax.
• Family home

  • The dwelling house, including the land on which it is situated, where the husband and wife, or a head of the family reside, as certified to by the Barangay Captain of the locality.
• For purposes of determining the estate tax, the estate tax return shall be filed within one year from the decedent's death.
• The Commissioner or any Revenue Officer authorized by him pursuant to the NIRC shall have authority to grant, in meritorious cases, a reasonable extension, not exceeding 30 days, for filing the return.
• As a general rule, the estate tax is imposed under the NIRC shall be paid at the same time the return is filed by the executor, administrator or the heirs.
• When the Commissioner finds that the payment of the estate tax or of any part thereof would impose undue hardship upon the estate or any of the heirs, he may extend the time for payment of such tax or any part thereof not to exceed 5 years in case the estate is settled through the courts, or 2 years in case the estate is settled extrajudicially.
• The cash installment shall be made within 2 years from the date of filing the estate tax return.
• In case of lapse of 2 years without the payment of the entire tax due, the remaining balance thereof shall be due and demandable subject to the applicable penalties and interest reckoned from the prescribed deadline for filing the return and payment of the estate tax.
• Estate tax


  Tax imposed on the net estate of every decedent, whether resident or non-resident of the Philippines
• The estate tax accrues as of the death of the decedent and the accrual of the tax is distinct from the obligation to pay the same. Upon the death of the decedent, succession takes place and the right of the State to tax the privilege to transmit the estate vests instantly upon death.
• Properties and interests included in the gross estate of a decedent

  • All properties, real or personal, tangible or intangible, wherever situated (for residents and citizens)
  • Only properties situated in the Philippines (for non-resident aliens), provided that with respect to intangible personal property, its inclusion in the gross estate is subject to the rule of reciprocity provided for under Section 104 of the NIRC
• Amounts withdrawn from the deposit accounts of a decedent subjected to the 6% final withholding tax imposed under Section 97 of the NIRC, shall be excluded from the gross estate for purposes of computing the estate tax.
• Valuation of the gross estate

  Properties comprising the gross estate shall be valued according to their fair market value as of the time of decedent's death
• Deductions from the gross estate of a citizen or resident alien of the Philippines

  • Standard deduction of P5,000,000
  • Claims against the estate
  • Claims of the deceased against insolvent persons
  • Unpaid mortgages, taxes and casualty losses
  • Property previously taxed
• Standard deduction(Resident/Citizen)


  A deduction in the amount of Five Million Pesos (P5,000,000) shall be allowed without need of substantiation
• Claims against the estate


  Debts or demands of a pecuniary nature which could have been enforced against the deceased in his lifetime and could have been reduced to simple money judgements
• Claims of the deceased against insolvent persons as defined under R.A. 10142 and other existing laws, where the value of the decedent's interest therein is included in the value of the gross estate, are deductible.
• Other deductible items from the gross estate

  • Unpaid mortgages upon, or any indebtedness in respect to, property where the value of the decedent's interest therein, undiminished by such mortgage or indebtedness, is included in the value of the gross estate
  • Taxes which have accrued as of the death of the decedent which were unpaid as of the time of death
  • Losses incurred during the settlement of the estate arising from fires, storms, shipwreck, or other casualties, or from robbery, theft or embezzlement, when such losses are not compensated for by insurance or otherwise
• In all instances, the mortgaged property, to the extent of the decedent's interest therein, should always form part of the gross taxable estate.
• Property previously taxed

  An amount equal to the value specified below of any property forming part of the gross estate situated in the Philippines of any person who died within five (5) years prior to the death of the decedent, or transferred to the decedent by gift within five (5) years prior to his death, where such property can be identified as having been received by the decedent from the donor by gift, or from such prior decedent by gift, bequest, devise or inheritance, or which can be identified as having been acquired in exchange for property so received:
• Deduction percentages for property previously taxed


  • 100% if prior decedent died within 1 year
  • 80% if prior decedent died 1-2 years prior
  • 60% if prior decedent died 2-3 years prior
  • 40% if prior decedent died 3-4 years prior
  • 20% if prior decedent died 4-5 years prior
• Transfers for public use


  The amount of all bequests, legacies, devises or transfers to or for the use of the Government of the Republic of the Philippines or any political subdivision thereof, for exclusively public purposes.
• Family home


  The dwelling house, including the land on which it is situated, where the husband and wife, or a head of the family, and members of their family reside, as certified to by the Barangay Captain of the locality.
• The family home is deemed constituted on the house and lot from the time it is actually occupied as a family residence and is considered as such for as long as any of its beneficiaries actually resides therein.
• Family home


  The place to which, whenever absent for business or pleasure, one still intends to return.
• Husband and wife


  Legally married man and woman.
• Unmarried head of a family


  An unmarried or legally separated man or woman with one or both parents, or with one or more brothers or sisters, or with one or more legitimate, recognized natural or legally adopted children living with and dependent upon him or her for their chief support, where such brothers or sisters or children are not more than twenty one (21) years of age, unmarried and not gainfully employed or where such children, brothers or sisters, regardless of age are incapable of self-support because of mental or physical defect, or any of the beneficiaries mentioned in Article 154 of the Family Code who is living in the family home and dependent upon the head of the family for legal support.
• Beneficiaries of a family home

  • The husband and wife, or the head of a family
  • Their parents, ascendants, descendants including legally adopted children, brothers and sisters, whether the relationship be legitimate or illegitimate, who are living in the family home and who depend upon the head of the family for legal support.
• The family home must be the actual residential home of the decedent and his family at the time of his death, as certified by the Barangay Captain of the locality where the family home is situated.
• The total value of the family home must be included as part of the gross estate of the decedent.