
Originally Posted by
machine.pistol
Not so fast. A voluntary transfer such as a sale or donation might appear to be simple and straightforward compare to a cadastral proceeding for amendment of title. But we have to look at the tax consequence as well. A donation will invite greater amount of tax compared to a sale. Donor's tax is around 30% whereas capital gains tax on sale is only 6%. So you might be better off selling the property instead.
But it might present a problem if the daughter is a minor (less than 18 years) or even if she's of majority age, say 20 years old but not gainfully employed (no TIN).
If less than 18 and therefore the daughter is not capable of entering into a contract such as of donation, the parents may have to go to court for the appointment of a property guardian (such as one of the parents) or posting of guardianship bond. Why? Because the property guardian will be holding the property in trust for the minor child. And the bond will act as security for the faithful performance by the property guardian of his obligations as such guardian.
If of legal age but not gainfully employed, the BIR will consider the sale as a donation and assess donor's tax, which is higher.
You're actually talking about estate planning this early because estate tax is, like donor's tax, also high relative to sales tax. Besides, heirs left with property will have to go through estate proceedings or estate settlement which could be complicated and costly. You don't want to pass leaving your child with property that will turn out to be a burden to her.
So at this time, I can't give the proper legal advice. Perhaps when the right time comes, say the daughter is of age and gainfully employed, you might then consider selling the property to her. There would then be no need for court appointment of guardian and posting of guardianship bond, no cadastral proceeding, no donor's tax, no estate tax, etc.
To avoid multiple payment of taxes where it is only the government that benefits, it is really advisable to buy property intended to be owned by children to buy it in trust for the children. The BIR recognizes trust arrangements. When the trust ends such as when the children come of age, the title can be amended (to reflect only the children as owner) without any tax consequence.