received by heirs under Republic Act No.

4917

Net share of the surviving spouse in the conjugal partnership or community property

ESTATE TAX

What are the allowable deductions for Estate Tax Purposes?

For a nonresident alien

1. Standard deduction – P500,000.00

2. Proportion of the following deductions

a. Claims against the estate.

b. Claims of the deceased against insolvent persons where the value of the
decedent’s interest therein is included in the value of the gross estate

c. Unpaid mortgages, taxes and casualty losses

3. Property previously taxed

4. Transfers for public use

Net share of the surviving spouse in the conjugal partnership or community property

Citizen or Resident ALIEN

Gross estate: Conjugal Exclusive Total

- Real property

- Personal property

Less: Deductions:

- Standard deduction (P5 M)

- Claims against the estate – debt instrument was notarized; statement showing
disposition of proceeds of loan, if contracted within 3years from date of death

- Claims of the deceased against insolvent persons

- Unpaid mortgages, taxes and casualty losses

- Properties previously taxed (vanishing deduction)

- Transfers for public use

- Family home (not to exceed P10 M)

- Amount received by heirs under RA 4917, provided such amount is included in gross
estate of decedent
)

War damage payments

Transfer by way of bona fide sales

Transfer of property to the National Government or to any of its political subdivisions

Separate property of the surviving spouse

Merger of usufruct in the owner of the naked title

Properties held in trust by the decedent

Acquisition and/or transfer expressly declared as not taxable

ESTATE TAX

What will be used as basis in the valuation of property?

The properties subject to Estate Tax shall be appraised based on its fair market value at the time of the
decedent's death.

The appraised value of the real estate shall be whichever is higher of the fair market value, as
determined by the Commissioner (zonal value) or the fair market value, as shown in the schedule of
values fixed by the Provincial or City Assessor.

If there is no zonal value, the taxable base is the fair market value that appears in the latest tax
declaration.

If there is an improvement, the value of improvement is the construction cost per building permit or the
fair market value per latest tax declaration

ESTATE TAX

What are the allowable deductions for Estate Tax Purposes?

For a citizen or resident alien

1. Standard deduction – A deduction in the amount of Five Million Pesos (P5,000,000.00) shall be
allowed as an additional deduction without need of substantiation.

2. Claims against the estate.

3. Claims of the deceased against insolvent persons where the value of the decedent’s interest therein is
included in the value of the gross estate

4. Unpaid mortgages, taxes and casualty losses

5. Property previously taxed

6. Transfers for public use

7. The family home - fair market value but not to exceed P10,000,000.00
8.Amount Share of the surviving spouse (50% of net conjugal estate)

Net Taxable Estate

 Estate tax (6%)

NONResident ALIEN

Gross estate: Conjugal Exclusive Total

- Real property

- Personal property

Less: Deductions:

- Standard deduction (P500 K)

- Proportion of the following:

 Claims against the estate – debt instrument was notarized; statement showing
disposition of proceeds of loan, if contracted within 3years from date of death

 Claims of the deceased against insolvent persons

 Unpaid mortgages, taxes and casualty losses

- Properties previously taxed (vanishing deduction)

- Transfers for public use

- Share of the surviving spouse (50% of net conjugal estate)

Net Taxable Estate

 Estate tax (6%)

 TRANSFER TAXES
 ESTATE TAX
 THE LAW THAT GOVERNS THE IMPOSITION OF ESTATE TAX

 It is a well-settled rule that estate taxation is governed by the
statute in force at the time of death of the decedent. The estate tax accrues as of the death of
the decedent and the accrual of the tax is distinct from the obligation to pay the same. Upon the
death of the decedent, succession takes place and the right of the State to tax the privilege to
transmit the estate vests instantly upon death.
 ESTATE TAX
 ESTATE TAX
 RATE OF ESTATE TAX
 The transfer of the net estate of every decedent, whether resident or non-
resident of the Philippines, as determined in accordance with the NIRC, shall be subject to an
estate tax at the rate of six percent (6%).
 ESTATE TAX
 What are included in gross estate?
 For citizen /resident alien decedents:
 a) Real or immovable property, wherever located
 b) Tangible personal property, wherever located
 c) Intangible personal property, wherever located
 For nonresident not citizen decedents:
 a) Real or immovable property located in the Philippines
 b) Tangible personal property located in the Philippines
 c) Intangible personal property - with a situs in the Philippines
 ESTATE TAX
 What are excluded from gross estate?
 GSIS proceeds/ benefits
 Accruals from SSS
 Proceeds of life insurance where the beneficiary is irrevocably appointed
 Proceeds of life insurance under a group insurance taken by employer (not taken out upon his
life