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Post by anthrax76 on Mar 18, 2008 14:40:37 GMT 8
Anyone out there who knows about this? I badly need help. Here's the scenario.
1) My mom owns a property (lot). Which she won years after being married. 2) Lot size, around 200 meters squared. 3) I was given a go signal to build a house there. 4) My mom plans to create a will, stating that I will inherit the lot.
Here are my questions, and please feel free to throw back questions because I totally don't know how things go.
1) How much will i pay if it was donated? 2) How much will i pay if instead of being donated to me, I would inherit it? 3) Since we will use the title as collateral on the loan to build the house, could we still change the ownership of the title while the loan is still being paid? 4) Will the BIR account for the properties after the death? And if there is an existing house in the lot, it will also be divided?
TIA
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Post by marcs on Mar 18, 2008 14:47:52 GMT 8
Not sure on these, but from what I've heard . . . - it's better to transfer the ownership now rather than inherit it, because there's this thing called inheritance tax. i think most people transfer titles already to avoid this. not sure if you need to show proof of purchase for this though - on loaning, wouldn't the bank keep the title of the lot as collateral? thereby no transfer of ownership is possible? net, better to consult your lawyer on these matters I think
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Post by anthrax76 on Mar 18, 2008 14:52:07 GMT 8
thanks brad, actually i need a lawyer right now. but i don't know how to call their specialty
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Post by cobym on Mar 18, 2008 16:02:54 GMT 8
Here is a very brief overview of the answer to your inquiries. What you need is called "estate planning." Inheritance tax and donor's tax are more or less the same rate around 10-20%, depending on the value. You want your mother to sell the lot to you for a nominal amount that would yield the least amount of capital gains tax. BTW, since she acquired the lot after marriage, your father is a co-owner to the extent of 1/2 the lot. He has to consent to the sale. Your co-heirs (if ever) will have a share in the lot, unless equivalent properties are bequeathed to them in the will that would more or less equalize the properties between the heirs. The bank has to consent to transfers of ownership of the mortgaged lot. The BIR shouldnt include the house as part of the estate. However, you should be ready with documentation to prove that the house is your property. You now owe me legal fees payable in bike parts. Just kidding
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Post by marcs on Mar 18, 2008 16:04:56 GMT 8
could the mother sell it for, say, 1 pesos? technically a payment was made and there was transfer of ownership. or does it have to be sold at fair value?
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Post by cobym on Mar 18, 2008 16:05:27 GMT 8
Here is a very brief overview of the answer to your inquiries without going into the technical nitty gritty. What you need is called "estate planning." Inheritance tax and donor's tax are more or less the same rate around 10-20%, depending on the value. You want your mother to sell the lot to you for a nominal amount that would yield the least amount of capital gains tax (5% or less). BTW, since she acquired the lot after marriage, your father is a co-owner to the extent of 1/2 the lot. He has to consent to the sale. Your co-heirs (if ever) will have a share in the lot, unless equivalent properties are bequeathed to them in the will that would more or less equalize the properties between the heirs. The bank has to consent to transfers of ownership of the mortgaged lot. You really have no choice since the bank normally hangs on to the title of the lot while the mortgage is unpaid. The BIR shouldnt include the house as part of the estate. However, you should be ready with documentation to prove that the house is your property. You now owe me legal fees payable in bike parts. Just kidding
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Post by cobym on Mar 18, 2008 16:08:53 GMT 8
Stupid me. pressed quote instead of modify.
Anyway. Yes, you can sell the property for P1, but it will be taxed at fair market value or assessed value, whichever is higher.
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Post by anthrax76 on Mar 18, 2008 17:01:51 GMT 8
okay....now that clears things up so far. thanks sir coby.
things further complicate though, but so far so good. i'm concerned with the taxes that i need to pay. whether it's cheaper to:
1) have the lot sold to me for a nominal amount, then pay all the taxes? 2) wait until i inherit the lot, then pay the taxes?
a friend of mine said no matter which procedure i choose, there's this 7.5% tax that i need to pay, although yeah, it will total to something like 10% with other taxes.
my mom said there's a bracketing (?). example, a property amounting to less than 1M is free of taxes when transferred, anything above that amount, I have no idea.
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Post by Ben Dover on Mar 18, 2008 17:10:57 GMT 8
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Post by anthrax76 on Mar 18, 2008 17:18:35 GMT 8
cool, thanks sir tolits, i'll check them out.
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Julia
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Post by Julia on Mar 18, 2008 19:09:56 GMT 8
My mom, sold our lot to my sister for 1 peso... it was 3 years ago... but they paid pa 20 thousand... im just not sure para saan. maybe taxes... ;D
I saw at unang hirit Atty. gabby stating that if your mom got the lot before her marriage, its a conjugal property of your mom and dad... but if after she married your dad and it was given to her, mommy is the sole owner of the lot so dad has nothing to do with it. tama ba??? ;D ;D ;D
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Post by marcs on Mar 18, 2008 19:21:56 GMT 8
actually I think it's the other way around. when you get married, you have a choice on how to treat your existing property, although the default is Absolute Community. but after getting married, all properties are conjugal I think?
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Post by baboinsky on Mar 18, 2008 19:26:07 GMT 8
Great info everyone.
Let's say we're talking about a big slice of land, would it be wise to create a corporation instead of iheriting or transferring the land to the next generation? Would this save anyone from paying the dreaded inheritance tax?
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Post by anthrax76 on Apr 18, 2008 18:55:16 GMT 8
Just an update:
The cheapest way to transfer a title is through inheritance. But you'll have wait for death. Although you can use the lot but you need to do a Deed of Fructuary to avoid legal issues later.
The next best option is donation.
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Post by allegra on Apr 18, 2008 21:21:31 GMT 8
Great info everyone. Let's say we're talking about a big slice of land, would it be wise to create a corporation instead of iheriting or transferring the land to the next generation? Would this save anyone from paying the dreaded inheritance tax? My observation lang on inherited assets Subdivide it between family members Magkanya kanya na Each pay the capital gains and the transfer fees, free naman yung property e
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Post by eatsrocksnmud on May 27, 2008 14:44:03 GMT 8
a donation would be cheaper than a sale if the property's zonal value is lower than 2.7M (this is the point where both a donation and a sale would be both subject to a 7.5% tax)
also it would save you tax money to have your mom AND dad donate it to you. that way they would split the value of the donated property (that is determined by it's zonal value which you can obtain at the BIR website). this would translate to a lower donor's tax as it would fall on a lower tax rate bracket. if the tax declaration of the house is in your parents name, that would form part of the donation. if it's already declared in your name, good for you.
consult a tax lawyer, better even a tax lawyer in the BIR
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