When it is time to transfer property to a family member it usually means you or a loved one has passed away. Understandably, this is a painful event we don’t ever want to think about. This leads to many people being uninformed and unprepared for a process than can be somewhat complicated.
The process to transfer property to a family member can take months, or even years, depending on how much property has been left behind. Most people avoid planning or discussing this with their family because these conversations can be unpleasant. The alternative is worse, however. Without proper planning, your loved ones will be left in a potentially stressful situation that they must try to navigate during what will already be a difficult time.
In the Philippines, the act of transferring your real estate property is most commonly completed with the help of Donation Inter Vivos or the Legal Donation Act (Art. 725, 618a). With that in mind, here are five steps to help smoothly transfer property to a family member.
Step 1 – Organize the required documents
It is important to make sure that the family member (or members) whom you’re transferring the property to have the right documents in his/her possession. The Bureau of Internal Revenue, the Land Registration Authority and the City Assessor’s will require documented proof that the inheritor is the heir or rightful owner of the property.
These are the documents the authorities will ask for:
- Condominium Certificate of Title – for condo unit(s)
- Transfer Certificate of Title – for houses or land
- Original Certificate of Title
Step 2 – Find the value
Have your property assessed by a professional so its true value is known. This is especially important if you renovated or installed anything extra to your home. Not only is this required for tax purposes, but it ensures everything has been documented for the family member(s) inheriting the property who may not otherwise have proof.
Step 3 – Stay current with all payments
Always make sure that your property’s taxes are being paid and are constantly updated. Additionally, any unpaid taxes should be made current to ensure these aren’t passed on to your family.
Step 4 – Make it legal
Speak with your legal counsel and make sure all of your arrangements are documented. This includes simple things, such as the full legal name of the person inheriting the real estate, to ensure it is legally binding. Also, if something does change, be sure to update this document.
Step 5 – Pay the right donor’s taxes
Be sure to pay the right donor’s taxes ahead of time. The Deed of Donation, a proof of ownership for the property you’re transferring and a Certificate of Improvement/No Improvement should be given to the Bureau of Internal Revenue.
If this seems overwhelming, you can always ask your legal counsel for assistance during the process. They should be able to answer any questions you have.