Query: Do I need to pay tax or "Amiliar" if the land property is from a Deed of Donation?
In the Philippines, land ownership and transfer are subject to various taxes and fees, even when the property is transferred via a Deed of Donation. Understanding these tax obligations is crucial for both donors and recipients to ensure compliance with Philippine laws.
Donor's Tax
When a land property is transferred through a Deed of Donation, the donor (the person giving the property) is primarily responsible for paying the donor's tax. The donor's tax rates in the Philippines are as follows:
- For donations to strangers (i.e., someone not related by consanguinity or affinity up to the fourth civil degree): 6% of the fair market value of the property.
- For donations to relatives: Progressive rates ranging from 2% to 15% depending on the net gift value after allowable deductions.
Documentary Stamp Tax
Aside from the donor's tax, the donation is also subject to the documentary stamp tax (DST). The DST is imposed at the rate of 1.5% of the fair market value of the property. This tax is required to be paid for the documentation of the transfer to be legally recognized.
Capital Gains Tax
If the property was acquired by the donor through sale and later donated, capital gains tax may apply depending on the circumstances of the acquisition. However, in the case of direct donation, capital gains tax is typically not applicable since no sale transaction occurs.
Transfer Tax
The local government unit (LGU) where the property is located may also impose a transfer tax. The rate varies by locality but generally ranges from 0.5% to 0.75% of the property's fair market value or zonal value, whichever is higher. This tax must be paid before the transfer can be officially recorded.
"Amiliar" or Real Property Tax
"Amiliar," commonly known as real property tax, is an annual tax imposed on real estate properties. Regardless of how the property was acquired, whether by purchase, inheritance, or donation, the new owner (donee) is responsible for paying the real property tax. The rates vary depending on the location and classification of the property but typically range from 1% to 2% of the assessed value.
Registration Fees
To officially transfer the property and update the land title, the donee must pay registration fees to the Register of Deeds. These fees are usually based on a percentage of the property's market value and include administrative costs for processing the transfer.
Compliance and Filing
Both the donor and donee must ensure that all taxes are properly calculated and paid. Failure to do so can result in penalties, surcharges, and interest charges. The Bureau of Internal Revenue (BIR) requires the submission of a Deed of Donation, a sworn declaration of the property's value, and proof of tax payments when filing for the transfer.
In summary, when a land property is transferred via a Deed of Donation in the Philippines, the involved parties must pay the donor's tax, documentary stamp tax, local transfer tax, and registration fees. Additionally, the donee is responsible for the ongoing payment of real property tax ("Amiliar"). Ensuring compliance with these tax obligations is essential to avoid legal issues and penalties.