Have you ever wondered how to compute Estate Tax in the Philippines and what documents you need?
Well, you're in the right place! Today, we're going to break it down in simple terms. Let's get started!
Welcome to Legal Guide PH, where we simplify the law to help you make better choices. I'm Atty. Erwin Zagala, and I'm with my partner, Atty. Ramon Ramirez.
We’re talking about how to compute estate tax and what documents you need.
Alright, let's dive into estate tax computation, step by step:
- Gather Your Assets: The first thing you'll need to do is make a list of all the assets in the estate. This includes real properties (land, buildings), personal properties (cars, jewelry), bank accounts, investments, and even insurance proceeds.
Anything of value owned by the deceased person. - Deductions: Next, deduct any debts, loans, and liabilities from the total value of the assets. This reduces the "net estate" value, which is the amount that's subject to estate tax.
Standard Deduction is PHP 5M. Family Home PHP 10M
Determine the Tax Rate: 6% vs Progressive rate. As of my last update, the rates range from 5% to 20%. - Calculate the Tax Due: Multiply the net estate value by the applicable tax rate to get the initial estate tax due. But wait, there's more!
- Apply Deductions and Exemptions: Now, you can reduce the initial tax due by applying deductions and exemptions. For instance, there's a standard deduction of Php 5 million, and certain family homes and properties used in a family business can be exempted up to a certain limit.
- Pay the Tax: Once you've calculated the final estate tax, it's time to pay up. You'll need to settle this with the Bureau of Internal Revenue (BIR). Keep all your receipts and records, as you'll need them for documentation.
Now, let's talk about the documents you'll need:
- Death Certificate: You'll need the death certificate of the deceased to prove their passing.
- EJS: Extrajudicial Settlement
- Authenticated Copies of Titles and Deeds: Gather the land titles and deeds of the properties in the estate.
- Tax Declaration: Obtain tax declarations for real properties from the local assessor's office.
- Proof of Deductions and Exemptions: Have documents ready to support any deductions or exemptions you're claiming.
- CPA Certification: Inventory of Assets and Liabilities: Create a detailed list of all assets and liabilities, including their values.
Note:
Approach the documentary requirements with reason. Ask why it is needed. Ask them why it is needed.
Conclusion:
Computing estate tax in the Philippines might seem complex, but it's all about gathering the right information and following the proper steps.
If you're dealing with estate tax matters, it's a good idea to consult with a tax lawyer or visit the Bureau of Internal Revenue (BIR) for guidance. They can help ensure that you're on the right track and that everything is properly documented.
If you found this video helpful, give it a thumbs up and share it with friends who might be dealing with estate tax questions. And remember, when it comes to legal matters, knowledge is power! Stay informed, stay empowered!
So wasn't that simple? Now go make better choices.
