Greetings!
Hi to the whole World! Happy day everyone!
Do keep yourselves safe and healthy! 💗
Today, I would share the process I did when I worked on a sale where one of the owners had already passed away.
The process
I could have prepared the "Extra Judicial Settlement of Estate with Deed of Absolute Sale" in this case. However, the BIR wanted me to submit all requirements for the estate tax filing and the sale. That would include the certificate of publication per their advise. As we already know from my previous blogs that the publication of the Extra Judicial Settlement of Estate, would run once a week, for 3 consecutive weeks, plus the additional paper works to finalize the completion of the certificate. That would take 30 days atleast, for the publishing company to give me the "certificate of publication."
With that, there was a big possibility that I won't be able to meet the deadline for the payment of taxes for the sale, which were the capital gains and documentary stamp taxes. I feared for the penalty charges on capital gains tax which should be paid within 30 days from the date when the Deed of Sale was notarized. For the documentary stamp tax, it should be paid within 5 days after the close of the month, when the Deed of Sale was notarized. So I opted to prepare separate documents for the Extra Judicial Settlement of Estate and the Deed of Absolute Sale.
I submitted the Extra Judicial Settlement of Estate for publication. While I held notarization of the Deed of Absolute Sale pending completion of the certificate of publication of the Extra Judicial Settlement of Estate. After a month, I got the certificate of publication. I proceeded to have the Deed of Absolute Sale notarized.
For your reference, you can click the link to the documents' template below:
Extra Judicial template
Deed of Sale
Update: Further into the process I learned that BIR won't need the certificate of publication. But it was too late, I already had 2 separate documents for the estate settlement and sale. I got the wrong information, the problem may be is with my interpretation. I really don't know. Anyway, everything turned out well for this transaction.
The requirements
For the Extra Judicial Settlement of Estate and Deed of Absolute Sale, please refer to my previous blogs for the list of requirements. Please click the links below to view.
Link to Deed of Sale requirements
Update: Birth certificate/marriage contract for children/husband/wife needed to vouch relationship. Thanks to one of your comments, it was a great help ⚘.
BIR submission for Extra Judicial Settlement of Estate and Deed of Absolute Sale
Once I got the certificate of Publication, I submitted both documents, the Extra Judicial Settlement of Estate and the Deed of Absolute Sale simultaneously to the BIR for the computation of estate tax as well as the capital gains and documentary stamp taxes. That way, I was able to avoid any penalties to the "sale" part of the process.
For the estate tax, per BIR,
"The rate applicable shall be based on the law prevailing at the time of decedent’s death."
Here is the link to the Estate Tax - Bureau of Internal Revenue website:
Taxes paid
The decedent's (the one who passed away) year of death was 2014, and the estate tax return was filed 3rd quarter of the year 2019. The estate was able to apply for estate tax amnesty. The estate tax penalty paid was only the minimum which was P5,000.00 plus miscellaneous charges or a total of P6,000+. Actually, the estate was tax exempt, charged was for the minimum penalties only.
For the sale part, the Deed of Sale amount was higher than the market value and the zonal value, so capital gains tax was computed at 6% of the sale amount. While the documentary stamp tax was at 1.5% of the sale amount.
Once I had the computation from BIR, I paid the taxes payable at nearby Landbank.
What to present to the bank:
1706 BIR form for the capital gain tax
2000- OT BIR form for the documentary stamp tax
1801 BIR form for estate tax return, or
- BIR Form 0621-EA (Acceptance Payment Form Estate Tax Amnesty)
- BIR Form 2118-EA (Estate Tax Amnesty Return)⁰
Notarized Deed of Sale
Notarized Extra Judicial Settlement of Estate
TIN nos of buyer/s, seller/s and estate
BIR (ONETT) computation sheet for the taxes payable
UPDATE:
IF WORKING ON ESTATE TAX UNDER ESTATE TAX AMNESTY (YEARS 2017 BELOW), two BIR forms are needed for the process:
- BIR Form 0621-EA (Acceptance Payment Form Estate Tax Amnesty)
- BIR Form 2118-EA (Estate Tax Amnesty Return)
Links to the BIR Forms:
However, use BIR form 1801 for taxable years which are not included in the tax amnesty, that is for years 2018 onwards.
Note for the BIR forms:
1. they must be duly filled up and signed by the authorized person who may be the seller/buyer or authorized representative
2. BIR forms must be filed in triplicates because the bank will also get a copy
Five days after paying the taxes, I submitted the payment forms together with all the documents for estate tax return and the deed of sale to BIR. By that time, the payment had already been reflected on BIR's database. Don't forget to have photocopies of the proof of payment from the bank before submitting them to BIR, for your records.
If I remember right, it took more than a month for the eCar to be released from BIR.
Transfer tax
Once the eCar (certificate authorizing registration) was released, I proceeded to pay the transfer tax at the municipality where the lot was located. It was computed at 1/2 of 1% of the amount on the Deed of Absolute Sale, being the highest amount among sale, market and zonal value of the land.
In paying the transfer tax, you have to present the documents released from BIR as basis for the transfer tax computation.
Register of Deeds Submission
After paying the transfer tax, I submitted the following to the Register of Deeds:
- all the documents released from BIR including Extra Judicial Settlement, Deed of Absolute Sale and eCar
- transfer tax payment
- Owner's Transfer Certificate of Title
- Certified true copy of tax declaration
- Tax clearance
- Photocopies of buyer and seller' s ID
- photocopy of my ID as authorized representative
Note: Duplicate copy of the eCar must be retained to be used when tax declaration will be transferred to the new owner's name.
Registration and miscellaneous fees at Register of Deeds
I am providing you a link of the bracket for the schedule of fees, so you may have an idea how much would be the registration fee and other miscellaneous expenses for the transfer of title.
Note as of October 13, 2022: I removed the LRA Schedule of fees meantime, as LRA has updated it but at this time the site is under maintenance.
After a month, the title was released from the Register of Deeds, already in the name of the buyer, the new owner of the property.
Transfer of tax declaration
The last part of the process is the transfer of the tax declaration to the new owner's name. Here are the requirements:
1. Owner's Copy of Transfer Certificate of Title
2. Deed of Sale with BIR stamping and notation of the transfer tax payment
3. Transfer tax receipt
4. Realty tax receipt/tax clearance
5. Owner's duplicate copy of the eCar
Note: assessor's office will get only photocopies of the above documents. Just bring the original for verification purposes.
It just took few minutes for the assessor's office to have the tax declaration transferred to the new owner's name.
Finally, that was the complete process, I hope you will find here helpful information.
Till my next blog, take care, God bless everyone! 🙏
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All information stated on the Site is based on the actual experiences and researches of the author at the time of posting. This is not intended as a substitute for professional advise. Information has been verified correct to the best of her knowledge, however, she cannot guarantee that there are no mistakes or errors. Rules and policies of government agencies mentioned on the blog may change without further notice.
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