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4-Estate Tax

Estate tax is levied on the transfer of a decedent's estate to heirs at death, calculated on the taxable estate after deductions. The gross estate includes all properties at the time of death, with a standard deduction of ₱5,000,000 and a flat tax rate of 6% on the net estate. Filing must occur within one year of death, and specific documentation is required, including a death certificate and inventory of properties.

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16 views2 pages

4-Estate Tax

Estate tax is levied on the transfer of a decedent's estate to heirs at death, calculated on the taxable estate after deductions. The gross estate includes all properties at the time of death, with a standard deduction of ₱5,000,000 and a flat tax rate of 6% on the net estate. Filing must occur within one year of death, and specific documentation is required, including a death certificate and inventory of properties.

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rmaelopezhobro
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We take content rights seriously. If you suspect this is your content, claim it here.
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Estate Tax

Definition

Estate tax is a tax imposed on the transfer of the decedent’s estate to their lawful heirs or beneficiaries
at the time of death.

Taxable Estate

The taxable estate is the net estate or the value of the gross estate after allowable deductions.

Gross Estate

Includes all properties, real or personal, tangible or intangible, wherever situated, at the time of the
decedent's death.

Allowable Deductions

1. Standard Deduction: ₱5,000,000

2. Claims against the estate

3. Claims of creditors

4. Unpaid mortgages

5. Medical expenses incurred within one year prior to death (up to ₱500,000)

6. Family Home: Deduction of up to ₱10,000,000

7. Amount received by heirs under Republic Act No. 4917 (retirement benefits)

Tax Rate

A flat rate of 6% of the net estate, regardless of the amount.

Exemptions
1. Estate of a decedent with a net estate not exceeding ₱5,000,000 and the estate is the sole family
home.

2. Benefits from the GSIS, SSS, and similar institutions.

3. Donations mortis causa to the government or educational and charitable institutions.

Filing and Payment

1. Estate Tax Return (BIR Form 1801) must be filed within one year from the decedent’s death.

2. Payment may be made in installment within two years without penalty, subject to approval.

Documentation Required

1. Death Certificate

2. Tax Identification Number (TIN) of the decedent and heirs

3. Inventory of properties and debts

4. Transfer documents (e.g., titles, deeds of sale)

Relevant Laws

- National Internal Revenue Code (NIRC), as amended

- Republic Act No. 10963 (TRAIN Law)

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