A Process on Property Inheritance

By: Hanna Rubio

As the world becomes more unpredictable, it is not wrong to prepare for the worst-case scenario of life. Doing so doesn’t mean someone’s too paranoid or overthinking things too much, instead, it only means that they are preparing themselves and their family once their time has come. And as you come across an article online about property inheritance while lounging inside of your House and Lot for Sale in Dasmariñas, Cavite, you can’t help but wonder how that works.

Because inheritance, at least for Filipino families is considered a taboo topic ever since. And if ever families decided to discuss it, it almost usually ends up with a dispute between each of them. Because they are fighting about who gets this and who deserves to get that, but that is not how it should work. There are the right processes for that which are why writing a will becomes a good idea. It divides the properties and gives them to their rightful heir.

Property Inheritance is the process of the acquisition of a specific real estate property when the owner passes away. But for everyone’s information, inheritance is far more complicated than it sounds.

Here Is the Process for Property Inheritance

Get the Death Certificate

Secure the death certificate of the deceased. This is needed to certify the decedent’s death. The process of the death certification takes quite a long time but it is the primary document that you will need to present for every transaction in connection with the passing.

The death certificate will be released depending on where the decedent died. The hospital will solely be responsible for it when the death happened at the hospital. On the contrary, if the death happened at the four corners of your House and Lot for Sale in Dasmariñas, Cavite—your home, the barangay health officer or the attending doctor will help on processing the certificate.

Determine the Settlement of the Estate

The decedent can settle the estate in two ways: judicial and extrajudicial.

Judicial settlement of the estate should be applied when the decedent left a will consisting of the division of the properties and stating to whom it will be given. Another reason to settle the estates judicially is when there is no will and the heirs are in a dispute—unable to come to an agreement on how they will divide the properties among themselves. In this case, the court’s involvement is highly necessary. It can be through the probate of the will or filing a petition for the settlement of the estate.

On the other hand, Extrajudicial settlement of the estate generally means that the decedent left no will that will state the division of inherited property to surviving spouse or other family members. This settlement is only applicable if there is no will, all the heirs agreed to the division of the property inherited, and there are no outstanding debts before the sole owner died. Unlike the judicial, extrajudicial settlement of the estate does not involve the court but rather the heirs talk among themselves. To be effective, it should be signed by all the heirs listing the specifics of the properties and how they are planning to divide the decedent’s estate which will then be published in the newspaper for 3 consecutive weeks.

Accomplish BIR Form 1904

After getting the death certificate and deciding on the settlement of the estate, accomplishing the BIR Form 1904 should be the next step. This is filed to help the deceased family on covering the expenses caused by the decedent’s death. This form, with the help of the Tax Reform for Acceleration and Inclusion Act (TRAIN) law, will allow the family members to access the bank account of the deceased.

But before all that, some documents must be accomplished for this to be possible. Some of the documents are the death certificate and the estate’s TIN which indicates that the estate is taxable. The form will then be submitted to the regional district office of BIR where the decedent lived.

Accomplish BIR Form 1801

Following the accomplishment of BIR Form 1904, BIR Form 1801 should be prioritized next. Now, you have to bear in mind that this should be done within the year of the decedent’s death, or else a penalty will be charged. This 1801 form will be used to compute the estate tax return. The inheritance tax will be computed based on the documents submitted about the property inherited. Once it is computed, you will be needing to pay the tax imposed on the accredited and authorized bank partners.

Estate taxes and Registration

The estate tax is the tax imposed on the right of the deceased person to transfer properties to the chosen heir/s. BIR mentioned and emphasized that estate tax is not considered a property tax but something that needs to be paid to be able to transfer ownership. This should be filed and paid within one (1) year since the owner died and can be extended until two (2) years if extrajudicial settlement of the estate is used.

A six percent (6%) tax rate is charged depending on the net value of all the decedent’s estate. Taxes imposed can also be based on the fair market value of the property itself. After paying the estate tax, the e-Certificate of Authorization Registration (e-CAR) will be processed and released.

Settlement of Local Transfer Tax

The local transfer tax (LTT) is charged by the city where the property is situated to finalize the transfer of the estate from the decedent to the heir. Its rate depends on where exactly the place is. For properties located in the province, the rate is not more than 0.50% while not more than 0.75% for assets located in the city.

Registry of Deeds for Inherited Property

Finally, after the long process of property inheritance, the last step is the registry of deeds. In this, the title of the estates will now be transferred from the deceased person to the rightful heir. This registration will now cancel the previous title and give sole ownership to the new title strengthened by the laws.

Related Blog: The Law on Property Inheritance in the Philippines

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