When a person dies in the Philippines, the transfer of their estate to the heirs is subject to a 6% estate tax on the net estate under the TRAIN law. The estate tax return must be filed with the BIR within one year from death, and the tax paid, before the heirs can transfer any titles. Generous deductions, including a ₱5 million standard deduction and up to ₱10 million for the family home, often reduce or erase the tax.
When a loved one passes away, their property does not automatically pass to the heirs free and clear. Before a land title, bank account, or vehicle can be transferred, the estate tax must be settled with the Bureau of Internal Revenue. This commentary explains how the tax is computed, the deductions that soften it, the filing deadline, and the recent expiration of the estate tax amnesty.
What Estate Tax Is
Estate tax is a tax on the privilege of transferring property upon death. It is imposed on the net estate of the deceased as a whole — not separately on each heir’s share. Under Republic Act No. 10963, the TRAIN law effective January 1, 2018, a flat 6% rate replaced the old graduated rates that reached as high as 20%.
How the Net Estate and 6% Tax Are Computed
The computation is straightforward in principle: the gross estate (all the real and personal property of the decedent) minus the allowable deductions equals the net estate, and 6% of the net estate is the tax. The most significant deductions include:
- A standard deduction of ₱5,000,000, allowed without need of substantiation;
- A family home deduction of up to ₱10,000,000;
- Claims against the estate, unpaid mortgages, and certain other deductions.
For many modest estates, these deductions reduce the taxable net estate to zero, so no estate tax is actually due — but a return may still have to be filed.
Filing and Payment: the One-Year Deadline
The estate tax return, BIR Form 1801, must generally be filed and the tax paid within one year from the date of death. In meritorious cases, the BIR may grant an extension to file (up to 30 days) and an extension to pay, and the tax may be paid in installments within two years. Required documents typically include the death certificate, the taxpayer identification numbers of the estate and the heirs, a list of the assets, and the deed of extrajudicial settlement or the court order settling the estate.
The eCAR and Transferring the Titles
After the estate tax is paid, the BIR issues an electronic Certificate Authorizing Registration (eCAR). The heirs present the eCAR to the Registry of Deeds, the Land Transportation Office, banks, or a corporation’s secretary to transfer the various assets into their names. Until the estate tax is settled, the titles remain in the deceased’s name and cannot be sold, mortgaged, or partitioned cleanly.
The Estate Tax Amnesty Has Lapsed
For years, an estate tax amnesty under Republic Act No. 11213, as extended by Republic Act No. 11956, let the estates of persons who died on or before May 31, 2022 settle at reduced rates and without penalties. That amnesty’s final deadline was June 14, 2025, and it has since expired. Estates must now be settled under the regular 6% estate tax regime, with surcharges and interest accruing on late payments. Heirs of relatives who died years ago should therefore act without further delay, as the cost of inaction only grows.
Frequently Asked Questions
How much is estate tax in the Philippines? Estate tax is a flat 6% of the net estate under the TRAIN law. The net estate is the gross estate less allowable deductions, which include a 5 million peso standard deduction and a family home deduction of up to 10 million pesos.
When must estate tax be filed and paid? The estate tax return must generally be filed and the tax paid within one year from the date of death, using BIR Form 1801. Extensions to file and to pay, and payment by installment within two years, may be allowed in meritorious cases.
Can we transfer the land title without paying estate tax? No. The BIR must first issue an electronic Certificate Authorizing Registration (eCAR), which is released only after the estate tax is settled. Until then, the property stays in the deceased's name.
Is the estate tax amnesty still available? No. The estate tax amnesty for deaths on or before May 31, 2022 ended on June 14, 2025. Estates must now be settled under the regular 6% estate tax, with surcharges and interest on late payment.
This commentary is for general informational purposes only and does not constitute legal advice. For guidance specific to your situation, please consult a licensed attorney.
If you need to settle the estate of a deceased relative and transfer their property to the heirs, our firm can guide you through the BIR and the settlement process. You may reach us via Viber or WhatsApp, call us at 0995 433 5550, or send an email to vivasnobles@gmail.com. We look forward to hearing from you.