SETTLEMENT OF THE ESTATE OF THE DECEASED

The property you are buying must be settled first between the heirs of the registered owner together will all the
properties of the deceased. This can be done extrajudicially. An agreement will be made between the heirs
that they are settling the estate of the deceased. If there is a disagreement, they can settle it in court.
Publication of the agreement in a newspaper is required. This should be shouldered by the seller unless you
will agree to pay the cost. The cost of publication will vary depending on the newspaper that you will choose.
To give you an idea, it will be around 10,000-P20,000.
After settlement, the estate tax should be paid by heirs to the BIR. The date of death of the decedent is
material because the heirs possibly did not immediately report the death of the decedent to the BIR. The rate
will vary depending on the date of death of the decedent. (But there is an amnesty for all delinquencies until
December 31, 2020 if the heirs failed to pay the proper taxes and settle the estate within the period required by
law).
Their representative will apply for the registration of the Estate, the Estate shall be given a separate Tax
Identification Number. Form 1801 shall be submitted to the BIR and will require basically the following:

 Photocopy of the death certificate of the deceased (the original needs to be presented)
 TIN of Estate, the decedent and the heirs.
 Deposit Slip/OR (Official Receipt) and a return that’s duly validated as proof of the payment
 Certified true copies of the Transfer/Original Certificate of Title of Real Property/Properties.
 Either of the following:

1. A sworn declaration of all the properties in the estate

2. Deed of Extrajudicial Settlement of the Estate (if the estate’s settled extrajudicially)
3. Court Order (for judicial settlements)

 Duly Notarized Original Special Power of Attorney if the person transacting/processing the transfer
is not a party to the transaction and/or Sworn Statement if one of the heirs is designated as
executor or administrator.
The rate of estate tax is 6% of the net taxable estate beginning January 1, 2018. Prior to 2018, it is based on a
progressive table (The rate will be different based on the value of the net taxable estate). Generally,the estate
tax is not payable in BIR but in an Authorized Agent Bank. After submitting the requirements, a claim stub with
a reference number will be provided.
Once the processing is completed, a document containing the Certificate Authorizing Registration (CAR)
will be given. For one-time CAR transactions, it can take up to 5 days starting from the day the tax returns were
received including the complete set of required documents.
It is only upon the release of the CAR that the land title is transferable.
The Seller is also the one responsible to settle the real property taxes on the property.

SALE OF THE REAL PROPERTY

Page 1 of 5
This is where you come in, as the buyer. A Notarized Deed of Absolute Sale must be executed between the
parties.
It is best to schedule the sale on the beginning of the month to give you more time to pay the taxes. Secure a
copy of the IDs of both parties and check if there is an appropriate Special Power of Attorney if the person you
are dealing with is a representative. The Capital gains tax is payable 30 days after the date of sale while the
Documentary stamp tax is payable on the 5th day following the month of sale. Transfer tax is due 60 days after
the sale. A surcharge equal to 25% of the tax due is charged for late payments, plus 20% interest per year on
any unpaid taxes, plus compromise penalty.

Capital Gains Tax – 6% of Selling Price or Fair Market Value whichever is higher
Fair Market value is whichever is higher between Assessed value from the Local Assessor’s
Office or Zonal value from the BIR.
Documentary Stamp Tax – 1.5% of the of SP or FMV
Transfer Tax - .5% of the SP or Zonal Value
Usually, only the Capital Gains Tax (CGT)  are for the account of the seller.The Documentary Stamps
Tax (DST) on the sale of real property, Transfer Tax, registration fees, Information Technology (I.T.) fees, and
all other expenses required to transfer the property from the name of the seller to the buyer are for the account
of the buyer. However, the seller and buyer can create a different agreement as to who pays the taxes, as long
as both parties agree in writing before the Deed of Absolute sale is is notarized.

Page 2 of 5
 SAMPLE COMPUTATIONS

ESTATE TAX ON SETTLEMENT ASSUMING ZONAL VALUE IS 2000 AND AREA IS 1200 SQM

Zonal value at 2000 per m2   2,400,000.00

Estate Tax 144,000.00
Documentary Stamp Tax 36,000.00
Transfer tax 12,000.00
Miscellaneous and others  
Cost of transferring to heirs   192,000.00

TAXES ON SALE (PURCHASE OF PROPERTY)

Selling price per m2   Ip SP = Php3,000 If SP = Php 3,400
Selling Price   3,600,000.00 4,080,000.00
Capital Gains Tax   216,000.00 244,800.00
Documentary Stamp tax 54,000.00 61,200.00
Transfer Tax   18,000.00 20,400.00
Other Expenses      
*Registration Fee   17,346.00 19,506.00
**Notary Public   36,000.00 40,800.00
Other Fees      
      3,941,346.00 4,466,706.00

OTHER FEES

*REGISTRATION FEE
      Ip SP = Php3,000 If SP = Php 3,400
selling price exceeds P1,700,000 3,600,000.00 4,080,000.00
fixed amount   8,796.00 8,796.00
additional P90 / 20,000 8,550.00 10,710.00
Registration Fee   17,346.00 19,506.00

**NOTARY PUBLIC 1% OF Selling price 36,000-40,800

But this is negotiable. Minimum is Php 1,500  

After paying the taxes, you need to request for the issuance of a CAR and Tax Clearance from the Revenue
District Office where the real property is located. You need to submit the documents supporting the
transaction, as well as proof that the correct taxes (both the type of tax and amount of tax), have been

Page 3 of 5
paid.

Please take note that the CAR for the transfer of real property shall be released by the Revenue District
Office (RDO) where the real property is located. Thus, it is important for you to determine the correct RDO
since you will be paying the taxes in the Authorized Agent banks (AAB’s) of such RDO.

It is possible that you may think a property falls under the jurisdiction of one RDO when in fact it is under
another RDO.

These are the documents that must be presented to the Register of Deeds for the transfer of
registration:
 Deed of Extrajudicial Settlement of Estate
 Deed of Sale (if a 3rd party bought the property)
 Owner’s duplicate of the Certificate of Title
 Affidavit of Publication from newspaper indicating that the extrajudicial settlement was published for 3
consecutive weeks, 1 per week
 BIR Certificate Authorizing Registration (after estate tax and documentary stamps were paid)
 BIR Certificate Authorizing Registration (after capital gains tax and documentary stamps were paid)
 Transfer Tax Receipt/Clearance
 Real Estate Tax Clearance
 Certified copy of Tax Declaration

Registration Fee (Register of Deeds) - If the selling price exceeds P1,700,000.00, You need to add P90 for
every P20,000.00 or fraction thereof; In excess of P1,700,000.00, in addition to the fee of 8,796.00.

The process involved in you transferring ownership of inherited land may vary on a case to case basis.
However, this is just to give you an idea on the basic requirements to help you save time and effort.

Regards,
JVV and BQV

https://www.foreclosurephilippines.com/how-to-secure-a-bir-certificate-authorizing-registration-car-and-tax-clearance-
for-the-sale-of-real-property-classified-as-a-capital-asset/

https://www.foreclosurephilippines.com/how-to-compute-registration-fees/?
fbclid=IwAR1GO1rrJU9HcqOaG2inI7d9v2Tq5Xm57rkPAglA9SA9wM-NILNHiKHVYis

https://www.bir.gov.ph/index.php/tax-information/capital-gains-tax.html

Page 4 of 5
https://www.facebook.com/notes/samuel-galan/transfer-certificate-of-land-title-in-the-philippines-process-
requirements-and-t/1570182926557032/

Page 5 of 5