Deductions From Gross Estate

Deductions from Gross Estate:

  1. Expenses, losses, indebtedness and taxes:(ELIT AS ACRONYM)

a. Funeral Expenses. Limit is 5% of gross estate not exceeding 200 000 (statutory maximum).

b. Judicial Expenses for the testamentary or intestate proceedings.

c. Losses due to fire, storm, shipwreck, or other casualty.

d. Losses due to theft, robbery and embezzlement.

e. Claims of the decedent against insolvent persons where the value of tje decedent’s interest therein is included in the gross estate.

f. Claims against the estate, provided that the debt instrument was notarized at the time of indebtedness was incurred; and, if the loan was contracted within 3 years before the death of decedent, a statement showing the disposition of proceeds from loan must accompany the estate tax return.

g. Unpaid mortgage, is included in the gross estate.

h. Income tax prior to the death of decedent.

i. Property taxes which have accrued to the death of decedent.

** If decedent was a citizen or resident alien, deduct all ELIT

**If decedent was a non-resident alien, pro-rate ELIT as follows:

Phil Gross Estate / Total Gross Estate  x Total ELIT = Deductible ELIT

2. Transfers for Public Purpose – These are bequests, legacies, devises or transfers the use of the government of the Phil. or any political subdivision thereof exclusively for public purpose.

3. Deduction for property previously taxed. (Vanishing Deduction).

4. The family home not exceeding P1,000,000.

** Requisites for deduction of losses in no. 3 and 4:

a. The loss is not compensated by the insurance or otherwise.

b. The loss is not claimed as deduction in the estate income tax return.

c. The loss must occur not later than the last day for payment of the estate. ( the payment of estate tax is 6 months from the time of death of decedent).

5. Standard deduction for citizen or resident alien decedent only 1,000,000.

6. Retirement benefits received by employees of private firms from private pension plan approved by the BIR under RA 4917.

7. Medical Expenses paid or incurred within 1 year prior to decedent’s death duly substantiated with receipts but not to exceed 500 000 for citizen or resident decedent.

8. Net Share of the surviving spouse in the conjugal partnership property or community property as diminished by the expenses properly chargeable from the estate.



About Jonathan Ruiz CPA

Entrepreneur, CPA Mentor, Stock market Newbie Mentor, Influential Author and Master's Degree in International Business graduate in Hult International Business School, UK. A father of two lovely daughters.
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