Residential, Investment, Capital Market
Inheriting a property from your parents’ will is a beneficial yet complicated matter when it comes down to it. For this reason, it is important to be prepared and to have all of your bases covered. Money and inheritance are a very sensitive topic for a lot of people, especially when it is the aftermath of a loved one’s passing.
Here is everything you need to know about inheriting real estate in the Philippines.
What are the main laws regarding property inheritance?
There is the Inheritance Law of the Philippines under the Civil Code of the Philippines which outlines the law of succession. This law determines who the primary, secondary, or concurring heirs are. Primary heirs consist of the legitimate children and descendants of the deceased while concurring heirs are their surviving spouses who are of the same importance. It is then followed by the secondary heirs who are the deceased’s parents, ascendants, and illegitimate children. The natural order outlined in the inheritance law is followed except in cases where there is a Last Will and Testament that states that secondary heirs get to have more than the provision allows.
What are the taxes involved?
Estate Tax is the tax imposed upon the privilege of the individuals to transfer properties occasioned by death, regardless of who gets the assets of the deceased. This is computed based on the whole worth of the deceased’s assets and should be paid before any distribution towards the beneficiaries are made. This is a tax that is levied on the right to transfer property following the death of the owner.
Inheritance Tax is another state tax that must be paid by the beneficiaries who receive the money or property from the estate of a deceased person. This is the obligation of the property’s beneficiary, determined individually for each recipient. The amount of tax paid here is based on the location of the property.
The Transfer of Inherited Land In The Philippines
There are a few different processes that you may need to go through in order to make the transfer of the inherited land official here in the Philippines. Here are some of the requirements you need:
- Extrajudicial Settlement of Estate
If your relative passed on and has failed to leave a will of their property, the transfer of your inheritance becomes invalid. This is why you need to undergo a process called Deed of Extrajudicial Settlement of Estate and Adjudication of Estate. This deed indicates that the deceased owner left no will and also has no debt. Moreover, the heirs are also indicated in the deed and the relationship of the owner to them.
- Application of BIR Form 1904 – Application for Registration
Application of BIR Form 1904 is an important document that you need to prepare as it notes that all parties should have a valid Tax Identification Number (TIN) as well as the owner. This helps you become verified and valid for transfer. With that said, you also need to fill up required forms stating that the information on the death certificate of the original owner should be the same.
Here are some of the required documents that you need to bring when applying for this form as well:
- TIN of Estate
- Proof of Payment (if applicable)
- Photocopy of the death certificate subject to the submission/presentation of the original
- Either of these documents are needed: Affidavit of Self Adjudication, Deed of Extrajudicial Settlement of Estate, Court Order, Sworn declaration of all properties of the estate.
Is it better to sell the inherited property?
Provided that the property inherited has been rightfully transferred to the inheritors by the deceased, this leaves you with the option on what to do with the property. Overall, there are many factors to consider especially if you are not the sole inheritor of the property. According to Forbes, if you are dealing with an inheritance, you potentially have the double impact of working through a loss, so you need to be prepared mentally, emotionally, and even financially. Also, in the case of conflicts of interest between the other inheritors, oftentimes it is best to just sell the property and divide the proceeds evenly.
In summary, and especially for Millennials with aging parents, it’s always good to have some knowledge on estates and inheritance, and what to expect in the looming future. Expect the process to be long and tedious, however, worth it once everything has been settled.
On the other hand, for the Baby Boomers, it’s best to be prepared to ensure that all matters relating to estates and inheritance are well arranged for the future.
When it comes to real estate planning and all matters relating to estate and inheritance, talk to the experts such as Santos Knight Frank. We are a renowned real estate services agency that has a great track record of serving clients with services such as occupier services & commercial agency, investment & capital markets, residential & sales leasing, property marketing, research & consultancy, valuation & appraisal, project management, asset management, property management, facilities management, technical services & engineering solutions. Just visit our website and speak to our real estate practitioners at https://santosknightfrank.com/.
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