Estate Tax Guide 2025: Why Many Filipinos Don’t Know About Inheritance Tax

What Every Filipino Must Know About BIR Estate Tax

Many Filipinos are surprised that there is an inheritance tax they need to pay before they can get their inherited property. While this is shocking for most unaware heirs, it is important to do your due diligence in managing inheritance matters to avoid paying a hefty penalty. So, let’s break down all the details that you should know when it comes to transferring inheritance in the Philippines, why people remain uninformed, and the best ways to deal with estate tax.

Reasons Why Filipinos Are Unaware of Estate Taxes

So, why do so many Filipinos not know about inheritance taxes? Here are the key reasons and how to address this knowledge gap:

• Lack of financial education. Estate tax, wills, and inheritance laws are rarely taught in schools or community programs. Most Filipinos only encounter basic income tax when they begin working. Without proper education, many assume the estate tax is only for the wealthy until they try to sell or transfer inherited property and get stuck in a long legal process with the BIR.
  
  
• Cultural avoidance of death-related topics. In Filipino culture, talking about death is often seen as taboo. As a result, heirs are often left in the dark about what assets exist and what to do when the time comes. This cultural hesitation leads to delays in filing estate tax returns and missed opportunities like the estate tax amnesty program, which allows reduced penalties and simpler processing.
  
  
• Misconceptions about who is affected. Many Filipinos believe that only families with vast wealth are required to pay estate tax. In truth, even those with a modest home or small piece of land are covered by estate tax laws. Any property left behind by a deceased individual may be subject to tax, depending on its value.
  
  
• Complicated government processes. The BIR estate tax process involves multiple steps: filing BIR Form 1801, securing the Certificate of Authorizing Registration, and preparing legal documents like death certificates, tax identification numbers, and sworn statements of assets. For many, these requirements feel overwhelming, especially in rural areas.
  

Why It’s Crucial to Pay Estate Taxes on Time

Understanding the estate tax in the Philippines is essential for protecting family wealth, ensuring smooth inheritance transition, and avoiding costly penalties. The estate tax amnesty program, which many Filipinos wish to be extended, is a good remedy to seek legal advice, updated documents, and officially settle inheritance taxes. So don’t wait for the penalties, talk to your family now and start planning your estate.

Final Thoughts

Due diligence in estate tax helps comply with the property transfer proceedings and avoids a huge penalty for not paying it on time. Always make sure that your tax obligations are settled so that you can easily put your inheritance under your name. If you are selling your property, list it with REALS.PH, or if you want to buy a new house and lot, or a condominium in Baguio City, our real estate agents can help you find the best option.