September 11, 2019

Since the total is 15 M, amount

Family Home
A n o t h e r a l l o wa b l e d e d u c t i o n f o r
Resident or Citizen Decedents.

It refers to dwelling house, including
the land on which the house or home of
the husband or the wife or head of the
family where the members of the
family resides.
Requisites for the decedent to
claim family home as deduction
1) Total value of the house and the lot
must be included in the gross
estate.
 Lot: Common
(Based on the current or fair market
value of the family home at the time
of the death of the decedent).

2) Duly certified by the Barangay
Captain of the locality where the
home was located that the home is
the family home.

3) Amount allowable is limited to the
current fair market value of the
family home as declared or included
in the gross estate, or the extent of
the decedent’s interest, whichever is
l o w e r, b u t n o t e x c e e d i n g P
10,000,000.00.
Note: Although the value may
exceed 10,000,000.00, you still need to
include it as part of the gross estate.
Illustration:
Mr. X, Filipino, died leaving his
residential house valued at 11 M and lot
valued at 4 M. 

deductible is only up to 10 M. But in
comparing the family home to be
deductible, you have to take into
consideration the decedent’s interest.
Since the property is presumed to be
common. The value deductible is only
7.5 M.


First we determine how much should be
included in the gross estate, then
determine the allowable family home
deduction. 



Case I:

House: Exclusive Property of Mr. X





GROSS ALLOWABLE
ESTATE DEDUCTION
HOUSE 11 M 11 M
LOT 4M 2M
TOTAL 15 M 13 M
- Total amount included in the gross
estate is 15 M. 

Although we only need to take into
consideration the decedent’s interest
in the computation of the the gross
estate. The entire value of house
should be included in order to claim
the allowable deduction of 1/2 share
of the surviving spouse from the net
taxable estate. 

To determine the allowable family
home deduction, the decedent’s
interest should be considered the
decedent’s interest. Thus, in the
present case since the house is
exclusive the allowable deduction is
100%. Since the lot is common, X’s

Taxation II Transcript 1
 interest is 50% or 2 M. 
 GROSS ALLOWABLE

 ESTATE DEDUCTION
In the analysis to determine the
allowable family deduction, you HOUSE 11 M 5.5 M
compare which between the LOT 4M 4M
allowable deduction of 10 M or the
computed allowable deduction is TOTAL 15 M 9.5 M
lower. 



In this case since 10 M is lower, the Since the allowable deduction is lower,
allowable deduction should be 10 M. 
 you claim 9.5 M. 


 

Since family home deduction is What if the properties are common ?
special deduction, in the computation
of the net taxable estate, it is not
included in the deduction of the 1/2 GROSS ALLOWABLE
ESTATE DEDUCTION
share of the surviving spouse. 


 HOUSE 11 M 5.5 M
Case II:


 LOT 4M 2M
House: Common
 TOTAL 11 M 7.5 M


Lot: Exclusive Property of Mrs. X


 If the classification is silent, it is
presumed to be common.
GROSS ALLOWABLE
ESTATE DEDUCTION

HOUSE 11 M 5.5 M
Transfers for Public Use
LOT - - Refers to bequest, legacies, devises or
transfers to or the use of the
TOTAL 11 M 5.5 M Government or any political subdivision

 thereof, for exclusively public purpose.

Since the allowable deduction is 

lower, you claim 5.5 M.
 Take note of the cavaet that it should

 be exclusively for public use.
Lot is not included because it is
owned by the surviving spouse. If donated for public use but used for
Hence, gross estate is only 11 M. 
 proprietary purpose, you can argue

 that the proprietary activity is a “post-
But for the house, since it is death development”.
common, it shall be valued at 5.5M
as X is entitled to 50% of 11M. 
 Retirement Benefits


Case III:
 under RA 4917


House: Common
 Any amount received by the heirs

 under an employer-employee
Lot: Exclusive Property of Mr. X
 relationship if the decedent dies under
employment.

Taxation II Transcript 2

As a rule, the entire thing is deductible
but the proceeds should be declared as
part of the gross estate.
Net share of the
surviving spouse
Ordinary Deductions
Liabilities from the expenses or
obligations incurred by the decedent
during his lifetime remaining unpaid at
the time of death or losses incurred
during the settlement of the estate.
Usually composed of the claims against
the estate, losses or claims against
insolvent persons, taxes and unpaid
mortgages.
Special Deductions
Not incurred by the decedent but are
provided by law as a deduction.
Comprised of the Standard Deductions,
Family Home, Vanishing Deduction.
Special Deductions are not included in
the computation of the 1/2 share of the
surviving spouse.
*DELPIN Problem
 less: Claims against


Gross Estate: 15 M



Automobile and land are exclusive
as it is inherited 
 Net Common Estate:
If gross estate is given, no need to
add-back the family home, land and
automobile, unless the given gross
estate is lower than the family home or
land.
Since we are to get the 1/2 share of
the surviving spouse, we should
Taxation II Transcript
determine the common and exclusive
property as we only apply the 1/2
deduction on the common.
Since the land and automotive is
exclusive, we deduct them from the
gross estate. The basis for the amount
deductible is the fair market value at
the time of death of the decedent.
The lower value rule only applies to
vanishing deduction.
Land is 1.2 M; Automobile is 120K



Thus:



Gross Estate:



Exclusive Property: 1,320,000.00

Common Property: 13,680,000.00
————————————————————
15,000.000.00





1. Deduct the ordinary deduction,
namely the claims against the estate
and unpaid taxes. Since they are
ordinary deductions, hence they are
charged against the common property.
Thus:



13,680,000.00



the estate. 50,000.00



Unpaid Taxes 80,000.00

————————————————————
13,550,000.00

Then obtain the total gross estate less
ordinary deduction (refer to attached
photo). In this case, 14,870,000.00.





3
 If you dont avail of the tax amnesty for
Then we apply special deductions settlement of estate of deaths before
2018, you are required to pay
Estate After
 compromise penalties which are higher
Common Deduction: 14,870,00.00 than 5,000.00.


Less:



Standard Deduction: 5,000,000.00

Vanishing Deduction: 642,384.00


(previously computed)

Family Home: *2,500,000.00


(example daw
 

5 M ang gross 

value sa family 

home hence 

only 1/2 may 

be claimed as 

deduction )

1/2 share of the 6, 775,000.00


surviving spouse. 



(based on the 

net common estate)



[13,550,000 X 50%]

———————————————————-



0

Although balance will be a negative

value, only place 0.

Even-though the value is zero, are

we required to pay 5,000.00 under
the Estate Tax Amnesty Law ?

Qualify. If DELPIN dies before 2018

and avails of tax amnesty, estate tax
payable is 5,000 as required under the
law, even if the taxable estate is 0. If
DELPIN died on 2019, he is not liable.

Taxation II Transcript 4
Taxation II Transcript 5