Notarized Documents and Taxes for Transferring Real Property from Parent to Child in the Philippines

What notarized document is needed for a father to transfer his real property to his first-born son, and what taxes will be paid?

In the Philippines, transferring real property from a parent to a child involves several legal steps and documentation. When the property is co-owned by the deceased spouse, the process also includes settling the estate of the deceased. Here is an outline of the necessary steps, documents, and taxes involved:

Legal Documents Required

1. Extrajudicial Settlement of Estate:

   • Since the property is co-owned and the mother is deceased, an extrajudicial settlement of estate is required to distribute the deceased's share. This document needs to be notarized and published in a newspaper of general circulation for three consecutive weeks.

2. Deed of Donation:

   • To transfer the property as a donation, the father must execute a Deed of Donation in favor of his first-born son. This document must be notarized to be legally binding. It should detail the property being transferred and the acceptance by the son.

3. Affidavit of Self-Adjudication:

   • If the property is solely adjudicated by the father (if he is the only heir of the deceased spouse), he may execute an Affidavit of Self-Adjudication. This document must be notarized and filed with the Register of Deeds.

4. Transfer Certificate of Title (TCT):

   • After notarization, the Deed of Donation must be registered with the Register of Deeds to update the Transfer Certificate of Title in the name of the son.

Taxes and Fees

1. Donor's Tax:

   • The donation of real property is subject to Donor’s Tax. The tax rate varies depending on the relationship between the donor and the donee. For donations between parents and children, the rate is typically 6% of the property’s fair market value or zonal value, whichever is higher.

2. Estate Tax:

   • The share of the deceased spouse is subject to Estate Tax before it can be transferred. The estate tax rate is 6% of the net estate value. Applicable deductions may reduce the taxable estate amount.

3. Documentary Stamp Tax (DST):

   • The transfer of property, whether by donation or inheritance, incurs Documentary Stamp Tax. The rate is 1.5% of the property’s fair market value or zonal value, whichever is higher.

4. Registration Fees:

   • The Register of Deeds charges fees for registering the Deed of Donation and updating the TCT. These fees vary based on the property value.

5. Publication Fees:

   • The extrajudicial settlement must be published in a newspaper, and this incurs publication fees.

Additional Steps

1. Bureau of Internal Revenue (BIR) Clearance:

   • Obtain a BIR Clearance for the payment of estate and donor’s taxes. This involves submitting various forms and documents, including the Deed of Donation, proof of payment of taxes, and a certificate of zonal valuation.

2. Municipal/City Assessor’s Office:

   • Update the tax declaration with the local assessor’s office to reflect the new ownership.

Summary

To transfer real property from a father to his first-born son in the Philippines, the primary notarized document required is the Deed of Donation. Additional steps include the extrajudicial settlement of the deceased spouse’s estate, payment of various taxes (estate, donor's, and documentary stamp taxes), and registration with the Register of Deeds. Proper compliance with these legal requirements ensures a smooth and valid transfer of property.