How to process the transfer of a Real Property involving an Estate

Processing for the transfer of a real property can be an arduous and daunting task. At times, left out properties became a liability rather than an asset due to intertwined issues.

These all boil down to how good you are at managing your properties so as to avoid possible issues not just for you but also for your children and the generations after.

You as an heir or a child may have inherited a piece of land from your ancestors or parent who had acquired the same from a sale, or awarded by the government. Sounds great right? However, you might not know how to transfer the same to your name or you have some issues in relation to it.

This is important because the longer you wait or your inaction in making the transfer makes you liable for penalties and taxes in the future.

Let us take for example that a direct ascendant passed away leaving a real property and you are an heir or one of the heirs.

In the eyes of the law, ownership on that property automatically passes to you at the moment of death of your ancestor. However, in order to transfer the monuments of title to your name, you need to process the same and pay the corresponding Estate Tax to the nearest Bureau of Internal revenue (BIR) Office.

What is an Estate Tax?

Estate Tax is the tax you are required to pay to the government for receiving an inheritance.

Under the law of the Philippines, you are given within one (1) year from the time of death of the decedent to do the processing; otherwise, you will be incurring penalties and surcharges upon the number of days delayed from supposed filing.

Failure or delay in taking action to transfer the property in your name will result to payment of penalties which may be much greater than the actual value of your property.

To illustrate, let’s take for example an inherited property with a Title still in the name of your ancestor who already died in 1980. Now you want to transfer the Title to your name and in order to do this, you and/or your co-heirs must pay estate tax computed from 1980 up to today.

A sample computation would be: the Estate tax to be paid in 1980 with interest + recurring interest in 1981 + 1982 and so on, up to 2021. The tax plus its interest are also gaining interest every year! You can just imagine how much it would be.

Remedy for unpaid Estate Taxes:

But hey, all hope is not lost, and there is a remedy but you have to grab it while it is still there.  The Government, in order to raise funds, may enact an amnesty law giving reprieve to delinquent tax payers and also to those unpaid estate taxes.

In the above-mentioned case, when an amnesty law is in effect, you will only need to pay the estate tax due at the time of the decedent’s death.

Sounds great right? Fortunately, Republic Act 11213 or the Amnesty law was enacted for the estate taxes of decedents who died on or before December 31, 2017. Said law took effect last April 2019 and is still good until April 2021.

In short, when you try to process the transfer of the title of properties of your ancestor to the heirs, you will only be paying the Estate Tax sans penalties and surcharges.

So what are you waiting for, you only have until April 2021 to avail of the tax amnesty law.

Now, that you have decided to go on, I will be sharing with you  the actual process of property transfer thru inheritance.

How to avail the Estate Tax amnesty:

 (1) Execute a Deed of Adjudication or Extrajudicial Settlement

If you are a sole heir or lone beneficiary, you have to execute a Deed of Adjudication and have the same notarized. You just have to make sure that there is no creditor involved whom the Estate of the deceased may have to pay first.

If you have co-heir/s, you have to talk among yourselves on how to divide the property and if all of you are already in an agreement, you can put the same in an Extra-judicial Settlement and acknowledged the same to a Notary Public. A special power of Attorney authorizing somebody to do the processing would be helpful if there are many parties involved.

 (2) By a Court Proceeding (if (1) is not feasible)

In any case wherein, an heir or a creditor of the deceased does not agree or feel aggrieved, you may not have a choice but to settle the same judicially by filing a case in court. This will eventually take longer than to settle Extrajudicially. Also, a reconstitution case will be needed if you happen to lost the owner's copy of the Certificate of Title.

In a situation wherein you are compelled to settle in court, you can still apply for amnesty coverage with the BIR pending determination of your case in court.

 (3) Get necessary clearance and payment of tax dues with the BIR

In any case where a Self-Adjudication or an Extrajudicial Settlement has been made, now you will have to file your Estate Tax Return with the BIR and pay the tax due and secure the necessary clearance or registration papers.

 (4) The Registry of Deeds (ROD)

When all requirements and certifications have been complied with, you will endorse the same to the Registry of Deeds until a new or transfer Certificate of Title in your name will be issued.

Congratulations for finally having the Certificate of Title in your name! Just remember that you still need to pay annually the Real Property Tax to the Assessor’s Office at the Municipality where the property is located.

That is the price you pay for owning the property, or else, time will come that the government will sell it in a Public Auction to cover the taxes which you have not paid.

If you have any question or clarifications, please comment below or leave us a message and subscribe to be notified for more updates and follow us on Facebook.

About the Author:
Atty. Frank G. Marcelino, RSW, is a Lawyer/Notary Public 
based in Iloilo City, Philippines. He specializes in Family and Estate Laws. 
Contact No.: 09457859725 Email: no2frank@gmail.com

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