Deductions from Gross Estate for Citizens and Residents
- Allowed deductions from the gross estate value include:
- Expenses, losses, indebtedness, and taxes:
- Actual funeral expenses or 5% of gross estate, max ₱100,000
- Judicial expenses for estate proceedings
- Claims against the estate with requirements for bona fide debts
- Claims of decedent against insolvent debtors
- Unpaid mortgages or property indebtedness included in gross estate
- Losses during estate settlement from casualty, theft, etc., not claimed for income tax
- Property previously taxed:
- Deduction based on a declining percentage from 100% to 20% depending on how long prior property transfer or death occurred before decedent’s death, limited to properties with documented gift or estate tax paid.
- Transfers for public use:
- Bequests or legacies to Philippine government or subdivisions for public purposes are deductible.
- The family home:
- Deductible up to ₱1,000,000 based on current or zonal value certified by barangay captain.
- Any value exceeding ₱1,000,000 is subject to estate tax.
- Expenses, losses, indebtedness, and taxes:
Filing of Estate Tax Return
- The estate tax return must be filed within six months from the date of the decedent’s death.
- A certified copy of the court-approved partition schedule must be submitted to the Commissioner within 30 days after court promulgation.
Rates of Donor's Tax
- Donor’s tax is imposed annually on total net gifts based on the following schedule:
- Up to ₱50,000: Exempt
- ₱50,000 to ₱100,000: 1.5%
- ₱100,000 to ₱200,000: ₱750 plus 3% of excess over ₱100,000
- ₱200,000 to ₱500,000: ₱3,750 plus 5% of excess over ₱200,000
- ₱500,000 to ₱1,000,000: ₱18,750 plus 8% of excess over ₱500,000
- ₱1,000,000 to ₱3,000,000: ₱58,750 plus 10% of excess over ₱1,000,000
- ₱3,000,000 to ₱5,000,000: ₱285,750 plus 15% of excess over ₱3,000,000
- Over ₱5,000,000: ₱558,750 plus 20% of excess over ₱5,000,000
Increased Donor’s Tax when Donee is a Stranger
- A stranger donee triggers a fixed 10% donor’s tax rate.
- Stranger defined as someone who is:
- Not a brother, sister, spouse, ancestor, or lineal descendant
- Not a collateral relative within the fourth degree of consanguinity
Provisions on Contributions for Political Campaigns
- Contributions in cash or kind to candidates, parties or coalitions are governed separately by the Election Code as amended.
Repeal and Effectivity
- Laws and regulations inconsistent with this Act are repealed or modified accordingly.
- The Act takes effect immediately upon approval.