Dear PAO,

I got married to my now-husband two (2) months ago. As a wedding present, my parents gifted us with a lot in Cavite. The title of the property is still under my parents’ names. Will the transfer be subject to tax? How do we transfer the title of the lot to my name?

Stella

Dear Stella,

To briefly answer your queries, yes, the parcel of land donated to you by your parents in celebration of your recent marriage may be subject to tax, particularly, donor’s tax and documentary stamp tax.

Per Sections 98(A) and 99 of the 1997 Tax Code of the Philippines, as amended by Section 28 of Republic Act (R.A.) No. 10963, otherwise known as the “Tax Reform for Acceleration and Inclusion (TRAIN) Law,” there shall be levied, assessed, collected, and paid upon the transfer of a property by gift, a tax of six percent (6%) on the basis of the total gifts in excess of Two hundred fifty thousand pesos (Php250,000.00) exempt gift made during the calendar year.

As a brief background, prior to the enactment of the TRAIN Law, donations made to one’s parents, grandparents, children, grandchildren, and other relatives up to the fourth civil degree of consanguinity may qualify for donor’s tax exemptions. However, this exemption was removed, and instead a uniform six percent (6%) donor’s tax rate is imposed, subject to specific exclusions or exemptions allowed by law.

To simplify, and following the current tax regime on donations, donations made to family members as gifts in celebration of birthdays, weddings, baptism, etc., should not be subject to donor’s tax, as long as the value of the gift does not exceed the Two Hundred Fifty Thousand Pesos (Php250,000.00) threshold i.e. the donor’s total donation for the calendar year does not exceed the threshold set by law.

In connection thereto, the donation is likewise subject to documentary stamp tax in accordance with Section 196 of the 1997 Tax Code, as amended by Section 69 of the TRAIN Law, which provides:

“Section 69. Section 196 of the NIRC, as amended, is hereby further amended to read as follows:

“Sec. 196. Stamp Tax on Deeds of Sale, Conveyances and Donation of Real Property. – On all conveyances, donations, deeds, instruments, or writings, other than grants, patents or original certificates of adjudication issued by the Government, whereby any land, tenement, or other realty sold shall be granted, assigned, transferred, donated or otherwise conveyed to the purchaser, or purchasers, or to any other person or persons designated by such purchaser or purchasers, or donee, there shall be collected a documentary stamp tax, at the rates herein below prescribed, based on the consideration contracted to be paid for such realty or on its fair market value determined in accordance with Section 6(E) of this Code, whichever is higher: Provided, That when one of the contracting parties is the Government, the tax herein imposed shall be based on the actual consideration:

“(a) When the consideration, or value received or contracted to be paid for such realty, after making proper allowance of any encumbrance, does not exceed One thousand pesos (₱1,000), Fifteen pesos (₱15.00).

“(b) For each additional One thousand pesos (₱1,000), or fractional part thereof in excess of One thousand pesos (₱1,000) of such consideration or value, Fifteen pesos (₱15.00). xxx”

Finally, in order for your parents to legally transfer the title of the property to you, there must be a deed of donation signed by your parents, and notarized before a notary public. After which, you must present the same to the Bureau of Internal Revenue (BIR) district office having jurisdiction over the property for the confirmed computation of the taxes due. Once the tax return is filed and taxes due are paid, present the same to the BIR for processing of the electronic Certificate Authorizing Registration (eCAR). The eCAR should then be submitted to the Register of Deeds where the property is located, to commence the titling of the property in your name. (Section 58(F) of the 1997 Tax Code, as amended)

Please note that the donor’s tax return must be filed and paid within thirty (30) days from the date of donation, while the documentary stamp tax is due on the (5th) fifth day of the following month when the donation was made. You must be cautious of the due dates so as not to incur penalties. (Section 103(B) and Section 200(B) of the 1997 Tax Code, as amended)

We hope that we were able to answer your queries. This advice was based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.

Thank you for your continued trust and support.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to [email protected]