Complete tax guide for Property Inheritors
Complete guide to estate and inheritance taxes for property heirs in the Philippines, including filing deadlines, exemptions, and settlement procedures.
Updated June 13, 2026
Key takeaways
- Estate tax is a 6% tax on the net estate of deceased residents; heirs are not personally liable but must wait for settlement before receiving property.
- The executor must file the Estate Tax Return (BIR Form 1801) within one year of death; missing this deadline incurs 25% surcharge plus 12% interest a year.
- The ₱5,000,000 is a STANDARD DEDUCTION applied to every resident/citizen estate, not an exemption threshold; the 6% estate tax applies to the net estate remaining after the ₱5M standard deduction (plus a family-home deduction of up to ₱10M and other allowable deductions).
- Proper valuation of inherited real property using independent appraisals protects against BIR reassessment and ensures accurate tax calculation.
- A tax clearance certificate from the BIR is mandatory before the Registry of Deeds will register property titles in the names of heirs.
- Document every deduction still allowed (the standard deduction, the family home, debts, unpaid mortgages and casualty losses). Funeral and medical costs are no longer deductible.
Tax obligations
- Estate Tax Return Filing
- The executor or administrator must file BIR Form 1801 (Estate Tax Return) within one year from the date of death. This return reports all assets, liabilities, and deductions of the deceased's estate and calculates the estate tax due. Failure to file on time results in a 25% surcharge plus 12% interest a year.
Deadline: One year from date of death
Form: 1801
- Estate Tax Payment
- The estate tax computed on the net taxable estate (at a flat rate of 6%) must be paid to the BIR. Payment is due when the estate tax return is filed. If the estate's cash is not enough, the tax may be paid in installments within two years from the payment due date without civil penalty and interest (NIRC §91(C)).
Deadline: Upon filing of Estate Tax Return; installments within two years if cash is insufficient
Form: 1801
- Tax Clearance Certificate Request
- After the estate tax return is filed and all taxes are paid, the executor must request a tax clearance certificate from the BIR. This certificate confirms that the estate has no outstanding tax liabilities and is required by the Registry of Deeds before property titles can be transferred to heirs.
Deadline: After estate tax payment; typically processed within 30 days
Form: BIR clearance request (no specific form number)
- Property Valuation and Appraisal
- All real property in the estate must be appraised at fair market value as of the date of death. The executor must obtain independent appraisals or use assessed values from the local assessor's office. These valuations are reported in the estate tax return and support the calculation of estate tax.
Deadline: Before filing the Estate Tax Return
Form: Supporting documentation (appraisal reports, assessor's certificates)
- Inventory of Estate Assets
- The executor must prepare a complete inventory of all assets owned by the deceased, including real property, personal property, bank accounts, investments, and life insurance proceeds. This inventory is submitted to the probate court and forms the basis for the estate tax return.
Deadline: Within 3 months of appointment as executor (Rules of Court, Rule 83); before Estate Tax Return filing
Form: Court-required inventory form (varies by court)
Registration process
Step 1: Obtain Death Certificate and Court Appointment
Secure a certified copy of the death certificate from the local civil registry. If there is a will, file it with the probate court and obtain a court order appointing you as executor or administrator. If there is no will, petition the court for appointment as administrator under the rules of intestate succession. Bring the death certificate, will (if any), and identification documents to the probate court.
Step 2: Register Estate with the BIR and Obtain ETIN
Register the estate with the BIR at the RDO with jurisdiction over the decedent's residence. Bring the certified death certificate, court order of appointment (if any), and your identification. The BIR will issue a TIN for the estate for use in all estate tax filings.
Step 3: Gather and Organize Estate Documents
Collect all documents related to the deceased's assets and liabilities: bank statements, property deeds, life insurance policies, loan documents, tax returns, marriage certificate, and birth certificates of heirs. Organize these by asset type and prepare a complete list. This documentation is essential for the estate tax return and probate proceedings.
Step 4: Obtain Property Appraisals and Valuations
Get the BIR zonal value and the assessor's fair market value of each real property as of the date of death; the higher of the two is the value for estate tax (NIRC §88(B)). Collect bank statements showing account balances as of the date of death. Gather life insurance policy documents showing death benefit amounts. Compile all valuations in a summary document for the estate tax return.
Step 5: Prepare and File the Estate Tax Return (BIR Form 1801)
With the help of a tax professional or accountant, complete BIR Form 1801 (Estate Tax Return). Report all assets at their appraised values, list all deductions (the standard deduction, the family home, debts and unpaid mortgages), and calculate the net taxable estate and estate tax due. File the completed form with the BIR office having jurisdiction over the deceased's residence, along with all supporting documents.
Step 6: Pay Estate Tax and Request Tax Clearance
Pay the estate tax together with BIR Form 1801 through an authorized agent bank or the BIR's electronic payment channels. If the estate's cash is insufficient, the tax may be paid in installments within two years (NIRC §91(C)). After payment, submit a request for a tax clearance certificate to the BIR. Once issued, the clearance confirms that the estate has no outstanding tax liabilities and is required for property transfer registration.
Calculators for Property Inheritors
- Estate Tax Calculator
Calculate 6% estate tax on inherited properties and assets in the Philippines. Under TRAIN Law, ₱5M standard deduction is automatic.
Taxes that apply
- Estate Tax
6% tax on net estate of deceased persons, filed within 1 year of death via BIR Form 1801.
- Documentary Stamp Tax
Tax on documents evidencing transactions, such as ₱15 per ₱1,000 on deeds of sale and 0.75% on loans, with rates set per document type.
Common questions
What is the difference between estate tax and inheritance tax in the Philippines?
The Philippines imposes estate tax, not inheritance tax. Estate tax is a tax on the transfer of property by reason of death, imposed on the estate itself (not on individual heirs). It is computed on the net estate at a flat rate of 6%. Inheritance tax, by contrast, is a tax on the heir's receipt of property and is not used in the Philippine tax system. As an heir, you do not pay inheritance tax; the estate pays estate tax before your share is distributed to you. (Source: National Internal Revenue Code, Section 85-86)
Is my inherited property subject to estate tax if the deceased was a non-resident of the Philippines?
If the deceased was a non-resident alien, only property located in the Philippines is subject to Philippine estate tax. Property located abroad is not taxed in the Philippines. Shares, bonds and similar intangibles issued by Philippine corporations are treated as located in the Philippines, but a reciprocity exemption may apply to intangible personal property (NIRC §104). The estate of a non-resident alien gets a ₱500,000 standard deduction instead of ₱5,000,000. (Source: NIRC, Sections 85, 86 and 104)
What happens if the executor fails to file the estate tax return within one year of death?
Failure to file the estate tax return within one year of death results in severe penalties. The executor is liable for a penalty of 25% of the unpaid estate tax, plus 12% interest a year from the original due date. These penalties can sharply reduce the value of the estate available for distribution to heirs. The executor may face criminal charges for tax evasion if the failure to file is deemed willful. It is critical to meet the one-year deadline. (Source: NIRC, Section 248-249)
Can the estate tax be paid in installments?
Yes. If the available cash of the estate is not enough to pay the total estate tax, payment by installment is allowed within two years from the payment due date, without civil penalty and interest (NIRC §91(C), as amended by the TRAIN Law). Separately, the Commissioner may extend the time to pay for undue hardship, up to five years for estates settled in court or two years for extrajudicial settlement (NIRC §91(B)). Neither option extends the one-year filing deadline; the return must still be filed within one year of death. (Source: NIRC, Section 91)
What deductions can reduce the taxable estate?
Under Section 86 as amended by the TRAIN Law, the deductions are: (1) the ₱5,000,000 standard deduction; (2) the family home, up to ₱10,000,000; (3) claims against the estate, such as debts of the deceased; (4) unpaid mortgages; (5) losses from casualty or theft during settlement; (6) transfers to the government for public use; and (7) the net share of the surviving spouse in the conjugal or community property. Funeral, judicial and medical expenses are no longer deductible. Proper documentation of each deduction is essential. The executor must attach receipts, invoices, and other supporting documents to the estate tax return. (Source: NIRC, Section 86)
Do I need a tax clearance certificate to transfer inherited property to my name?
Yes, a tax clearance certificate from the BIR is required before the Registry of Deeds will register the transfer of property titles to heirs. After the estate tax return is filed and the estate tax is paid, the executor must request a tax clearance certificate from the BIR. This certificate confirms that the estate has no outstanding tax liabilities. Once obtained, it is submitted to the Registry of Deeds along with the deed of distribution to register the property in the heir's name. Without the clearance, the Registry of Deeds will not process the transfer. (Source: BIR regulations and Registry of Deeds procedures)
How does the ₱5,000,000 standard deduction work, and do I still need to file?
The ₱5,000,000 is a STANDARD DEDUCTION, not an exemption threshold. For the estate of a resident or citizen, you first subtract the ₱5,000,000 standard deduction (plus a family-home deduction of up to ₱10,000,000 and other allowable deductions) from the gross estate; the flat 6% estate tax then applies to whatever net taxable estate remains. If the gross estate does not exceed the available deductions, the net taxable estate is zero and no estate tax is due, but the executor still typically files BIR Form 1801 to secure the Certificate Authorizing Registration (CAR/eCAR) needed to transfer property titles. (Source: NIRC Sections 84-86 as amended by RA 10963; Revenue Regulations No. 12-2018)
How is the fair market value of inherited real property determined for estate tax purposes?
Real property is valued as of the date of death, not at current market value. The value is the higher of (1) the fair market value determined by the Commissioner (the BIR zonal value) or (2) the fair market value in the schedule of values of the provincial or city assessor. Attach the certified zonal value and the tax declaration or assessor's certificate to the return. If a lower value is used, the BIR may assess the difference and issue a deficiency notice. (Source: NIRC, Section 88(B))
Sources & References (4)
Primary sources and the laws, regulations, and official issuances this page relies on. Each citation links directly to the issuing authority’s document.
- LawPhil Project (Arellano Law Foundation). “NIRC Sec. 84-86: estate tax 6% on net estate; ₱5M standard deduction; ₱10M family home deduction.” lawphil.net. National Internal Revenue Code, Sections 84-86, as amended by RA 10963 (TRAIN). Accessed .
- bir-cdn.bir.gov.ph. “BIR RR No. 12-2018: estate tax regulations under TRAIN (deductions, Form 1801, filing).” bir-cdn.bir.gov.ph. BIR Revenue Regulations No. 12-2018. Accessed .
- Bureau of Internal Revenue. “BIR Estate Tax: filing of Form 1801 within one year; installment payment (Sec. 91).” bir.gov.ph. BIR Estate Tax information; NIRC Sections 90-91. Accessed .