We’ve seen it all in the teleseryes that we watch every night: everyone is going crazy over the issue of inheritance. The good protagonist is always up against the villainous antagonist just because of a piece of land.
In reality, inheritance is a pretty common thing here in the Philippines. Land, after all, is very abundant here. It’s the most common type of material that parents often give to their children when they passed away. There are many issues that’s often stipulated in inheriting property like the issue of tax, how to transfer property of the deceased when there’s no will, or how to sell an inherited property.
To help you with your inherited property dilemma, we decided to collect some of the most common questions about the said issue and answered them one by one.
Q: What is the difference between inheritance tax and estate tax?
A: In the Philippines, the difference between these two is pretty simple. Inheritance tax is given to those people who inherits money or property from a deceased person. The amount of tax that you get is based on the location of the property. Meanwhile, estate tax, according to BIR, is “…a tax imposed on the privilege of transmitting property upon the death of the owner.” Both taxes are going to paid by the inheritors of the property.
Q: How can I transfer the property of a deceased person?
A: Inheritors of the property may still transfer a property of a deceased person to their name even without a will of testament. Here are the important steps that you have to do:
- Step 1: Fill out BIR Form 1904 (Application for Registration).
- Step 2: Prepare the mandatory requirements that you have to submit to the BIR. Go to their website to see the complete list of requirements.
- Step 3: Pay the estate tax and inheritance tax as computed. The processing of estate tax can be completed in 60 days.
- Step 4: Submit all documents and receipts to the RDO.
- Step 5: Wait for the release of Certificate Authorizing Registration.
Read this article to learn more about transferring property to a family member.
You must also complete the following documents:
- Deed of Extrajudicial Settlement of Estate
- Owner’s duplicate certificate of the land title
Q: How can I sell an inherited property?
A: A problem in real estate in the Philippines is the huge number of properties who are still under the name of a deceased person. This is a big no, since the property won’t be able to be transferred to the name of the buyer until the estate of the deceased person is settled. If you are the inheritor of the property, you have to first settle the estate before selling the property (see the previous question to do this).
If you already settled the estate, the next thing that you have to do is to fulfill the following requirements:
- Create a Deed of Sale.
- Payment of capital gains. Capital gains pertain to the tax that the seller has to pay based on what he or she gained from the sale.
- Go to the BIR Certificate of authority to Register the Sale
- Collect the BIR confirmation receipt for capital gains/withholding tax and documentary stamps
When all of these are already completed, you must then transfer tax receipts to the property’s buyer. In case a buyer is a corporation, then you also have to complete the articles of incorporation and board resolution. If you still don’t have a buyer for the property, then contact a real estate agent right away, or better yet, post your ad in our portal.
If still have more questions, feel free to drop us a line on our Facebook page or in our contact box.
Image source: http://www.persquare.com.ph/for-sale/house-lot-central-luzon-region-3-pampanga-mabalacat/house-lot-for-sale-in-mabalacat-city-pampanga_98a3d048fc4e36251477d13114c89f55ae17e45 – NT Reality Asia