For estate tax purposes, Philippine real property is valued at whichever is higher between the BIR zonal value for that location and the fair market value shown on the assessor's tax declaration, both taken as of the decedent's date of death. Land and any improvements on it are valued separately, each from its own figure.
For Philippine estate tax purposes, real property is valued at whichever is higher between (1) the zonal value fixed by the Bureau of Internal Revenue (BIR) for that location, and (2) the fair market value shown in the schedule of values of the city or provincial assessor — as reflected on the property’s tax declaration. Both figures are taken as of the decedent’s date of death, not the date the estate tax return is filed. Land and any improvements on it (a house, a building) are valued separately, because BIR zonal values generally apply only to land.
The Rule: Whichever Value Is Higher
Revenue Regulations No. 12-2018, which consolidated the estate and donor’s tax rules under the TRAIN law, states it plainly: the appraised value of real property as of the time of death shall be whichever is higher of — the fair market value as determined by the Commissioner of Internal Revenue (this is the BIR zonal value), or the fair market value as shown in the schedule of values fixed by the provincial and city assessors. The estate does not get to choose the lower figure, and it cannot substitute an independent appraisal for these two official values unless neither is available.
This “higher of the two” rule exists because zonal values and assessor’s schedules are updated on different timelines and by different offices, and in many areas one figure has simply drifted further from current market conditions than the other. The law closes that gap by pegging the tax base to whichever number is larger, rather than letting an estate cherry-pick.
Step by Step: How to Actually Value the Property
In practice, valuing a parcel of real property for the estate tax return works like this:
- Step 1 — Identify the exact location and classification. Pull the property’s title (Transfer Certificate of Title or Condominium Certificate of Title) and current tax declaration from the city or municipal assessor. You need the barangay, street, lot and block numbers, and whether the property is classified residential, commercial, agricultural, or industrial — zonal values and assessor schedules are both organized by location and classification.
- Step 2 — Get the BIR zonal value for that location. The Revenue District Office (RDO) that has jurisdiction over the property (or over the decedent’s place of domicile, for the estate tax return itself) can provide a certified print-out of the applicable zonal value per square meter for that specific zone. Zonal values are published per barangay or subdivision and can vary block by block, so the RDO reference is more reliable than an old print-out someone kept from a previous transaction.
- Step 3 — Get a certified true copy of the tax declaration. Request this from the city or provincial assessor’s office where the property is located. The tax declaration shows the fair market value the assessor has fixed for that property under its own schedule of values — this is the second number you need.
- Step 4 — Compare the two and use the higher figure. Multiply the zonal value per square meter by the lot area to get the BIR-based figure, then compare it against the fair market value on the tax declaration. Whichever is larger is the value that goes into the gross estate for that parcel.
- Step 5 — Value any improvements separately. If there is a house, warehouse, or other structure on the land, its value is taken from the fair market value shown on the improvement’s own tax declaration, since BIR zonal valuation ordinarily covers land only, not what is built on it.
- Step 6 — Repeat for every parcel in the estate. An estate frequently owns several lots, sometimes in different cities or provinces, each requiring its own zonal value certification and tax declaration.
Land and Improvements Come From Two Different Sources
One of the more common points of confusion is treating the “assessed value” on a tax declaration as if it were the number BIR actually uses. Under the local assessment system that provincial and city assessors follow, the assessed value used to compute real property tax is the fair market value multiplied by an assessment level set by local ordinance — a smaller figure than the fair market value itself. What BIR compares against the zonal value is the fair market value shown in the assessor’s schedule, not the discounted assessed value used for local real property tax billing. Using the wrong figure can materially understate the gross estate and expose the return to a deficiency assessment later.
For the house or building standing on the land, there is ordinarily no separate BIR zonal value to compare against, so the fair market value on the improvement’s tax declaration is what gets used, without the “higher of two” comparison that applies to land.
Special Situations
No Zonal Value Has Been Fixed for the Area
Some newer subdivisions or remote barangays do not yet have a zonal value schedule. Where the BIR has not fixed a zonal value for that specific location, the fair market value from the assessor’s tax declaration generally becomes the operative figure, subject to verification by the RDO handling the estate tax return.
Agricultural Land
Agricultural property is valued using the same higher-of-two approach, drawing on the zonal value (if any) applicable to agricultural land in that zone and the assessor’s fair market value for agricultural classification, which is typically lower per square meter than residential or commercial zones in the same area.
Condominium Units
Condominium units are valued the same way, using the zonal value applicable to the specific building or project (condominium projects are frequently assigned their own zonal value distinct from the surrounding area) compared against the unit’s fair market value on its tax declaration.
Multiple or Undivided Parcels
Where title has not yet been subdivided, or where several heirs will eventually receive different portions of one large lot, the entire parcel is still valued as a whole for the estate tax return at the date of death, based on its existing title and tax declaration; subdivision and individual titling of the heirs’ shares typically happens after the estate tax has been settled and the Certificate Authorizing Registration (eCAR) has been issued.
Why the Valuation Date Matters
The estate tax return must reflect the fair market value as of the date of the decedent’s death, not the value on the day the heirs finally get around to filing. This matters in two directions. If the estate tax return is filed late, the value used in computing the tax is still the value at death — the estate does not get to use a lower historical value simply because zonal values have since risen, nor is it penalized with a higher current value. What changes with a late filing is not the valuation, but the surcharge and interest that accrue on the unpaid tax from the original due date. Heirs sometimes assume that waiting will let them value the property lower; it will not, since the reference date is fixed by law at the moment of death.
Do You Need a Licensed Appraiser?
For the ordinary run of estates, no. The zonal value and the assessor’s fair market value are official government figures that BIR itself relies on, and a private appraisal does not override them for estate tax purposes. An independent appraisal becomes relevant mainly in disputed or unusual situations — for instance, where neither a zonal value nor a usable tax declaration exists, or where the BIR examiner specifically requests supporting documentation during an audit of the estate tax return.
Documentary Requirements Tied to Valuation
When the estate tax return (BIR Form No. 1801) is filed, the valuation documents that typically need to accompany it include: certified true copies of the tax declarations for the land and any improvements, a certification of the applicable zonal value from the RDO, and a certified true copy of the title. Where the gross estate exceeds ₱5,000,000, the return must also be supported by a statement certified by a Certified Public Accountant. These same valuation documents ultimately support the eCAR that BIR issues once the estate tax has been paid — without it, the property cannot be transferred to the heirs’ names.
Frequently Asked Questions
Is the assessed value on my tax declaration the same figure BIR uses for estate tax? No. BIR compares the zonal value against the fair market value shown in the assessor's schedule of values, not the discounted assessed value used to compute local real property tax, which is a smaller number.
What if there's no BIR zonal value for my property's specific location? Where BIR has not fixed a zonal value for that area, the fair market value from the assessor's tax declaration generally becomes the operative figure, subject to verification by the Revenue District Office handling the estate tax return.
Does the property's value change if I file the estate tax return years after death? No, the value used is still the fair market value as of the date of death. Filing late does not change the valuation, but it does expose the estate to surcharge and interest on the unpaid tax.
Do I need to hire a licensed appraiser to value the property? Generally not. The zonal value and the assessor's fair market value are the official figures BIR itself relies on, and an independent appraisal is only needed in unusual cases where neither figure is available.
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.
Getting this valuation right the first time avoids a deficiency assessment later, since BIR checks every estate tax return against its own zonal value tables as a matter of routine.