Transfer Tax
-
From donation (inter vivus) - donor’s tax
through succession/estate (mortis cosa)
Sale – capital gains tax
-
Benefits received theory
o We should tax estate because the one having the property has benefits
Tax Recruitment Theory
o Properties that are earning are taxed
State Partnership Theory
Well Trade Distribution Theory
Ability to Pay Theory
Tax Evasion or Minimization Theory
Nature
-
Privilege Tax (to receive land or possession)
National tax
Progressive tax – increases as value inc
Direct Tax – direct on the value
Advol Tax?
Fiscal tax
Non-Taxable Transfers
-
Void Transfers – donated sa sariling asawa, trans with defects/violence/crime
Quasai Transfers
Incomplete transfers – conditional
Revocable Transfer in contemplation of death - mana
Estate Tax
-
Namatay/Decedent – Testator(testament)/Intestate/Mixed
Heirs – Legatee (personal property)/ Devisee (land)/ General Heir(residual)
Estate – obligations(ordinary/special) / properties (personal or real)
Estate Middleman – Executor
Legitime – property reserved for the compulsory heirs
Legitime
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For mag asawa - properties
Distribution – 1/6 for anaks ½ for asawa
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1/3 if both parents are dead
Compulsory Heir – heirs in the order of priority
-
Primary: Legitimate Children, Descendants
Concurring: Surviving Spouse and anak sa labas
Secondary: Legitimate Parents, Aunts and Uncles
2nd Prio
-
5th degree of consanguinity (magkadugo/ direct bloodline)
3rd Prio
-
Philippine Government
Tranfers na akala ay non pero taxable pala
1.
2.
3.
4.
5.
Transfer under the contemplation of death – under estate tax
Revocable Transfers – 1st phase taxed already
Trasferred for insufficient consideration
Transfer passing under general
Transfer with retention of rights
For Estate Tax Basis – the higher of the fair market value
Value of the Properties vs a certain percentage – CGT 6%
Estate Tax
-
Progressive tax
Ad Valorem Tax
National tax
Excise Tax
Revenue or General Tax
General Formula of Gross Estate
-
we take an inventory of the property at the point of debt
Less: except transfers
Taxable present properties/
Add taxable transfers
Gross estate//
Property Regimes
-
Are the laws that govern properties ng mag asawa
Ano nga ba pag aari ng isat isa
ASP – absolute separation prop – pag aari lang ni A pag aari lang ni b
CPG – at the point of marriage yun lang skanila
ACP – both sakanila
Aug 3, 1988 rule
Absolute Separation Property – all are separate except if they put the property jointly.
Conjugal Partnership of Gains – common properties/ fruits of individual labor or fruits of their properties
during marriage.
Absolute Community Property – common properties are present properties napag aari ng bawat isa
during marriage – kung ano ang sayo sakanya rin
Future Fruit of Individual – Labor and common proper
By default, they are assumed to be common
When it is vague – assume as conjugal
Sale or Exclusive Property
-
Property is exclusive to Party A only
Major Rule: Inheritance/ Donation – any will always be exclusive, exception under ACP, naman before
kasal di siya exclusive, pero pag during exclusive.
Properties – Personal use – exclusive, exception – jewelry will be common.
Prior marriage (brought into marriage) – exclusive
DEDUCTION






Ordinary - decrease the amount of estate
Special – reduced the amount of estate for computation purposes
Share of the Survivor Spouse
A liability
Must be contracted in good faith
Must be enforceable in court
Substantiation Rule
- Proof to claim that specific deduction.
- Burden on proving that is on tax payer
Matching Principal
- An item of deduction must be part of gross estate
No Double Cross
- It shall not be claimed as special if it is claimed as ordinary.
Default Presumption
- Deductions are for common properties unless proven to be for the exclusive property
ORDINARY DEDUCTIONS
1. Transfer for Public Use
2. Vanishing Deductions
3. Loses, Indebtedness and Taxes
- Losses
 They must be incurred within 1 year from the date of death to be claimable.
 Must not compensated by insurance.
- Mortgage can be claim against the estate as deduction
Claims against Insolvent Persons –
 Unrecoverable part – loss, claimable in the estate tax as a deduction
Unpaid Mortgages – must not been incurred before death and still unpaid for it to
be claim as deduction
Gross Estate - Di pa binawasan ng mortgage
-
Taxes
 Incurred before death and still unpaid
NOTE: FUNERAL, MEDICAL, JUDICIAL EXPENSES ARE NOT CONSIDER AN ESTATE DEDUCTIONS
TRANSFER FOR PUBLIC USE
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Donation to the government
Must be indicated in the last will and testament
REQUISITES
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For social welfare charity
-
 Not more than 30%
Religious Organization – not consider as TPU
SPECIAL DEDUCTIONS
1. Standard Deduction – if u died 1997-2017 SD = 1,000,000
2018 onwards 5,000,000
2. Family Home – must be the permanent dwelling house
REQUISITES FOR THE DEDUCTIBILITY
- Actual Residential Home certified by the Brgy Cap
- Must be included in the gross estate
Deduction - Lowest of the Fair Market Value of 10, 000, 000
3. RA4917 – 50% deductible
4. SSS – ½ of the common property
Exclusive Properties
Conjugal Properties
LIT
Claims against the estate – Conjugal Prop- FBR (Family Benefit Rule) AND PCR (Property
Classification Rule)
Claims against Insolvent person – CP - PCR
Unpaid mortgages – FBR OR PCR
Losses – PCR
Taxes
Property classification rule – If the deduction came from common property then it’s a
common property
LIT
Exclusive Properties
Conjugal
Properties
CATE
PCR
FBR or PCR
CAIP
Unpaid mortgages
Losses
TFPU
PCR
PCR
PCR
Here only
PCR
FBR or PCR
PCR
Vanishing Deductions
Property Regime
(CPG)
ACP – Exclusive or
Common
Gross Estate
Net Estate before
special deductions
EP
x
CP
x
FH
SD
RA
SSS
Net Estate
GE
x
x
x
x
x
xx
Only when u have computed the gross estate of ordinary deductions can you deduct the
special deductions.
Net Estate before special deduction. Net estate times what rate?
ESTATE TAX RATE – 6%
Ordinary Deduction - Subject to property regime
Special Deduction – Net Estate
COMPLIANCE