Tax Deductions in Philippine Estate Tax 2025 Guide

Complete Guide to Estate Tax Deductions in the Philippines

In the Philippines, it’s crucial to settle estate tax for land owners to help ensure smooth transfer of assets. With the TRAIN Law and Revenue Regulations No. 12-2018 shaping the current tax framework, understanding allowable estate tax deductions can significantly minimize tax liabilities and protect your legacy. So, let’s dive into the complexities of Philippine estate tax and understand how to execute a strategic estate planning in this guide.

What is Estate Tax?

Estate tax is a tax on the right to transfer property upon the death of an individual. It is imposed on the net estate of the deceased, which is the gross estate minus allowable deductions. For Filipino property owners and investors, strategic estate planning means knowing which deductions apply and how to properly document them.

Key Estate Tax Deductions in PH

Understanding all tax deductions applicable to you can help manage your estate planning well. Here are the deductions that may apply to your estate tax:

• Standard Deduction (PHP5 Million). This is the most straightforward deduction available to every estate, whether the decedent was a Filipino citizen or a resident alien. No detailed breakdown or supporting documentation is needed, making it     a hassle-free way to reduce the taxable estate.
      
• Claims Against the Estate. These     include funeral expenses up to PHP200,000, judicial expenses related to estate settlement, unpaid debts at the time of death, and unpaid mortgages or liabilities on estate properties. Proper documentation, such as notarized loan agreements and receipts, is essential to support these claims.
      
• Family Home Deduction (Up to PHP10 Million). If the decedent’s principal residence qualifies as a family home, up to PHP10 million of its value can be deducted. It must be owned by the decedent and/or surviving spouse, and included in the gross estate.
      
• Property Previously Taxed. To avoid double taxation, properties inherited from another deceased person within 5 years may qualify for a deduction. The percentage deductible depends on how recently the previous transfer occurred, with up to 100% deductible if within one year.
      
• Transfers for Public Use. Any donation or legacy to the Philippine government or its subdivisions for exclusively public purposes may be deducted, provided they are     properly documented and included in the gross estate.
      
• Amount Received Under RA No. 4917. If the decedent’s employer provides benefits to heirs in accordance with RA 4917, these amounts can also be deducted, as long as they’re declared in the estate.
      
• SurvivinSpouse’s Share in Conjugal or Community Property. Only the decedent’s share is taxable. The surviving spouse’s portion is automatically deducted to prevent double taxation.
  
  
  ​Final Thoughts

Proper estate planning is not just for the wealthy, it’s essential for all property owners and investors in the Philippines. Taking advantage of allowable estate tax deductions can preserve wealth for future generations and prevent unnecessary legal complications. Ensure that all deductions are properly substantiated and consult a tax advisor or real estate expert who can help you settle these tax deductions. Contact us today for your questions and other related concerns.