Donation of Real Property

STeps, fees and and other things you need to know when you transfer a donated property

Transfer of real properties may be done by way of donation, either to immediate family members, relatives or to a friend or an acquaintance. However, the transfer of real property should comply with the legal and regulatory requirements in the Philippines. Here’s a quick steps guide to donating a real property.
 
Identification of the relationship between donor (person or entity making the donation) and donee (person or entity receiving the donated property) for consideration of donor’s tax.
Donor’s tax treatments between parties:

a) Donations to Relatives Within the fourth degree of consanguinity (parents, siblings, children, grandparents, cousins) – Exemption of Php250,000 cumulative value per taxable year. Donor’s tax is imposed on the value above this amount.
b) Donations to “Stranger” - Not within the fourth degree of consanguinity or affinity. A friend is considered a stranger for tax purposes. No exemptions. Donor’s tax is imposed on the full value.
 
Process of donation of real property

STEP 1

Written agreement between donor and donee
Deed of donation (must be notarized)
should include:
a) Full names of the donor and donee
b) Full description of the property
c) Declaration by donor that it is being given freely and without compensation
d) Acceptance by the donee

STEP 2

Payment of Donor’s Tax to BIR
(within 30 days from date of donation)
 
Computation:
Donor’s Tax = Tax Base multiply by 6%
Tax Base: higher of the zonal value or fair market value
· To persons within fourth degree of consanguinity – tax base is amount more than Php250,000.
· To strangers – tax base is the full value
For submission to BIR:
a) Notarized Deed of Donation
b) Tax Identification Numbers (TIN) of donor and donee
c) Valid IDs of donor and donee
d) Certified True Copy of Title (from Registry of Deeds)
e) Tax Declaration (from Assessor’s Office)
f) Certificate of No Improvement (if vacant lot)
g) BIR Form 1800 (Donor’s Tax Return) and payment

STEP 3

Securing a Certificate Authorizing Registration (CAR) from BIR
N.A.
Issued by the BIR after payment of donor’s tax.

STEP 4

Pay Transfer Taxes at the Local Treasurer’s Office (LGU)
 
Computation:
0.5%–0.75% multiply by the higher of zonal or fair market value
a) Notarized Deed of Donation
b) Tax Identification Numbers (TINs) of donor and donee
c) Certified True Copy of Title (from Registry of Deeds)
d) Certificate Authorizing Registration (CAR) issued by BIR
e) Tax Declaration (from Assessor’s Office)
f) Valid Government-issued IDs of both parties
g) Donor’s Tax Receipt
h) Transfer Tax Return (Local Government Form)

STEP 5

Transfer of title at Register of Deeds
Cancellation of the old title and issuance of a new one under the donee's name
a) Notarized Deed of Donation
b) Original title
c) Certificate Authorizing Registration (CAR) issued by BIR
d) Transfer tax receipt
e) Valid Government-issued IDs of both parties

STEP 6

Updating of tax declaration at local assessor’s office
Cancellation of the old tax declaration and issuance of a new one under the donee's name
a) Notarized Deed of Donation
b) New title (under donee’s name)
c) Certificate Authorizing Registration (CAR) issued by BIR
d) Valid Government-issued IDs of both parties
e) BIR Form 1800 (Donor’s Tax Return) and proof of payment
f) Tax Declaration (from Assessor’s Office)
g) Barangay clearance (optional - as may be requested)

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