Is It Cheaper to Transfer the Title While Parents Are Still Alive

How to Save Money When Transferring a Property Title From Parents

If you haven’t thought of it yet, time will come when you need to transfer the title of the property your parents own. And a lot of people are asking where they can save some money, is it by transferring the title while their parents are still alive or just wait until they’re gone. Well, this is a practical question and no one should feel bad about this. Find out the answer in this article including the four major fees that you need to settle during the title transfer.

Donor’s Tax vs. Estate TaxSo, why is it better to wait until your parents are gone before you transfer the mother title. There’s one good reason for this, and not everyone is aware of it. You can save a lot of money when transferring the title of a property from the deceased owner. It’s because you are paying the estate tax instead of the donor’s tax. Let’s make it even simpler with some examples so you can easily understand how this works.

You don’t need to pay for the Documentary Stamp Tax if the original owner is already gone. The DST is based on 1.5% of the net value of the property. For example, for a 10 million-worth property, you will pay Php 150,000 for the Documentary Stamp Tax. If both parents are gone while transferring the title, you don’t have to pay this huge amount. Therefore, you’re able to save money by settling the estate tax rather than paying the donor’s tax.
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4 Major Fees During Title TransferHere are the processing fees that you need to pay when transferring the title of an inherited property in the Philippines:

1. Estate Tax. This is the 6% of the net estate or total value of all the properties that belong to your deceased parents with BIR set deduction. Let’s say the net estate of the property is Php 10 million, the estate tax will be Php 600,000 minus the BIR set deduction. You will settle this with the BIR where the registered owner resides.
   
       
2. Transfer Tax Fee. With a 10 million-worth property, the Transfer Tax Fee is 0.5% of the     value. This fee is paid at the Treasurer’s office where the property is registered.
   
       
3. Registration     Fee. This fee must be paid at the Registry of Deeds. The amount depends on the assessed value of the property, and this is system generated. If the value is 10 million pesos, the registration fee would be Php 49,386.83.
   
       
4. Notarial Fee. The notarial fee depends on the lawyer you hire to notarize the document. However, the common rate used is 1% of the property’s net value. So if it’s worth Php 10M, then you need to pay Php 100,000 to your lawyer for the notarial fee.
   
   
   

Now that you have an idea how much money is involved when transferring a land title, you can make an informed decision whether to transfer the title before or after your parents are gone. Let us know if you have further questions so we can assist you and address your concern.

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