DEDUCTIONS TO GROSS ESTATE

1. Ordinary Deductions ( with the train law updates)

2. Special Deductions ( with the train law updates)

ORDINARY DEDUCTIONS

*** CLAIMS AGAINST INSOLVENT PERSONS

1. The amount has been initially included as part of his gross estate
2. The incapacity of the debtors to pay their obligation is proven
3. Only the portion uncollectible is is deductible
Claims of deceased against insolvent persons as defined under R.A. 10142, where the value of the
decedent’s interest therein is included in the value of the gross estate.

*** CLAIMS AGAINST THE ESTATE Consist of the bonafide unpaid personal obligation of the
decedent of a pecuniary nature. Claims against the estate or indebtedness in respect of property may
arise out of:
a) Contract
b) Tort
c) Operation of Law

*** UNPAID MORTGAGES

1. In case unpaid mortgage payable is being claimed by the estate, verification must be made as to who
was the beneficiary of loan proceeds.
2. If the loan is found to be merely an accommodation loan where the loan proceeds went to another
person, the value of the unpaid loan must be included as a receivable of the estate.
3. In all instances, the mortgaged property, to the extent of the decedent’s interest therein, should
always from part of the gross taxable estate.

*** UNPAID TAXES AND CASUALTY LOSSES

Taxes
1. The following are not deductible
2. Income tax on income received after death
3. Property taxes are accrued before death
4. Estate Tax
Losses
1. Arising from fire, storm, shipwrek, or other casualty, robbery, theft or embezzlement
2. Not compensated by insurance or otherwise
3. Not claimed as deduction is an income tax return of the taxable estate
4. Occurring during the settlement of the estate
5. Occurring before the last day for the payment of the estate tax.

*** TRANSFER FOR PUBLIC USE

1. The disposition is in a last will and testament
2. To take effect after death
3. In favor of the government of the Philippines, or any political subdivision thereof
4. For exclusive public purposes
5. The value of the property given is included in the gross estate
*** VANISHING DEDUCTION (pati yang table bebb)

SPECIAL DEDUCTIONS

*** FAMILY HOME

1. The family home must be the actual residential home of the decedent and his family at the time of his
death, as certified by the Barangay Captain where the family home is situated.
2. The total value of the family home must be included as part of the gross estate of the decent.
3. Allowable deduction must be equivalent to the fair market value of the family home, or the extent of
the decedent interest (whether conjugal/community or exclusive property) whichever is lower, but not
exceeding P10,000,000.

*** STANDARD DEDUCTION

If the Decedent is either a Citizen or Resident of the Philippines:
A deduction in the amount of Five Million (P5,000,000) shall be allowed without the need of
substantiation.

If the Decedent is a Non-Resident Alien:

Only Five Hundred Thousand Pesos (P500,000) shall be allowed without need of substantiation.

*** AMOUNTS RECEIVED BY HEIRS UNDER RA 9417

Any amount received by the heirs from the decedent’s employer as a consequence of the death of the
decedent-employee is allowed as a deduction.

Provided that the amount of the Separation Benefit is included as part of the gross estate of the
Decedent.

*** SHARE OF THE SURVIVING SPOUSE

- After deducting the allowable deductions to the conjugal or community properties included in the
gross Estate, the Share of the surviving spouse must be removed to ensure that only the decedent’s
interest in the estate is taxed.

- No deduction shall be allowed in the case of a non-resident decedent not a citizen of the Philippines,
unless the executor, administrator, or anyone of the heirs, as the case may be, includes in the return
required to be filed in the Section 90 of the Code the value at the time of the decedent’s death of that
part of his gross estate not situated in the Philippines.