Inherited Land Transfer-Advisor Estate tax Legal Succession land problem Inheritance BIR Form 1801

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Revenue Code of 1997, as amended (NIRC), and Sec. 84 of Republic Act No. 10963, otherwise
known as the “Tax Reform for Acceleration and Inclusion (TRAIN) Law”, these Regulations
are hereby issued to consolidate the rules governing the imposition and payment of the estate
and donor’s tax incorporating the provisions of the TRAIN Law, particularly the provisions in
Chapters I and II of Title III of the NIRC, thereby repealing Revenue Regulations (RR) No. 2-
2003, as amended.
SEC. 2. RATE OF ESTATE TAX. – The net estate of every decedent, whether
resident or non-resident of the Philippines, as determined in accordance with the NIRC, shall
be subject to an estate tax at the rate of six percent (6%).
SEC. 3. THE LAW THAT GOVERNS THE IMPOSITION OF ESTATE TAX. –
It is a well-settled rule that estate taxation is governed by the statute in force at the time of
death of the decedent. The estate tax accrues as of the death of the decedent and the accrual of
the tax is distinct from the obligation to pay the same. Upon the death of the decedent,
succession takes place and the right of the State to tax the privilege to transmit the estate vests
instantly upon death.
Accordingly, the tax rates and procedures prescribed under these Regulations shall
govern the estate of decedent who died on or after the effectivity date of the TRAIN Law.
SEC. 4. COMPOSITION OF THE GROSS ESTATE. – The gross estate of a
decedent shall be comprised of the following properties and interest therein at the time of
his/her death, including revocable transfers and transfers for insufficient consideration, etc.:
1. Residents and citizens – all properties, real or personal, tangible or intangible, wherever
situated.
2. Non-resident aliens – only properties situated in the Philippines provided, that, with
respect to intangible personal property, its inclusion in the gross estate shall be valued according to their fair market value as of the time of decedent’s
death.
If the property is a real property, the appraised value thereof as of the time of death
shall be, whichever is the higher of –
(1) The fair market value as determined by the Commissioner, or
(2) The fair market value as shown in the schedule of values fixed by the provincial
and city assessors, whichever is higher.
For purposes of prescribing real property values, the Commissioner is authorized to
divide the Philippines into different zones or areas and shall, upon consultation with competent
appraisers, both from the private and public sectors, determine the fair market value of real
properties located in each zone or area.
In the case of shares of stocks, the fair market value shall depend on whether the shares
are listed or unlisted in the stock exchanges. Unlisted common shares are valued based on their
book value while unlisted preferred shares are valued at par value. In determining the book
value of common shares, appraisal surplus shall not be considered as well as the value assigned
to preferred shares, if there are any. On this note, the valuation of unlisted shares shall be
exempt from the provisions of RR No. 06-2013, as amended.
For shares which are listed in the stock exchanges, the fair market value shall be the
arithmetic mean between the highest and lowest quotation at a date nearest the date of death, if
none is available on the date of death itself.
The fair market value of units of participation in any association, recreation or
amusement club (such as golf, polo, or similar clubs), shall be the bid price nearest the date of
death published in any newspaper or publication of general circulation.
To determine the value of the right to usufruct, use or habitation, as well as that of
annuity, there shall be taken into account the probable life of the beneficiary in accordance
with the latest basic standard mortality table, to be approved by the Secretary of Finance, upon
recommendation of the Insurance Commissioner.
SEC 6. COMPUTATION OF THE NET ESTATE OF A DECEDENT WHO IS
EITHER A CITIZEN OR RESIDENT OF THE PHILIPPINES- The value of the net estate
of a citizen or resident alien of the Philippines shall be determined by1. Requisites for Deductibility of Claims Against the Estate -
2.1.1. The liability represents a personal obligation of the deceased existing at the
time of his death;
2.1.2. The liability was contracted in good faith and for adequate and full
consideration in money or money’s worth;
2.1.3. The claim must be a debt or claim which is valid in law and enforceable in
court;
2.1.4. The indebtedness must not have been condoned by the creditor or the action
to collect from the decedent must not have prescribed.
2.2. Substantiation Requirements. - All unpaid obligations and liabilities of the
decedent at the time of his death are allowed as deductions from gross estate. Provided,
however, that the following requirements/documents are complied with/submitted :

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