Giving property away while you’re alive triggers the donor’s tax — since the TRAIN Law, a flat 6% of everything one donor gives above ₱250,000 in a calendar year (Section 99, NIRC). The rate is simple; the confusion is always about scope: what counts as a gift, whether everyday giving is taxed, and who pays. This guide answers those questions directly — with worked examples you can verify in our donor’s tax calculator.
The computation in one picture
| Step | Amount |
|---|---|
| Total gifts by one donor, one calendar year | ₱1,000,000 |
| Less: annual exemption (§99(A)) | −₱250,000 |
| Taxable net gifts | ₱750,000 |
| Donor’s tax due (6%) | ₱45,000 |
The ₱250,000 exemption is per donor, per calendar year, across all gifts to all recipients combined — it is not ₱250,000 per gift and not per child. TRAIN replaced the old 2–15% graduated schedule with this single family rate.
Is every gift of value taxed?
Every gift is countable — but in practice, ordinary gift-giving owes nothing. The law sweeps in every transfer below full value, adds it to your year-total, and taxes only the excess over ₱250,000. Birthday money to a child, a holiday gift to a parent, remittances home: all of it technically counts toward the year’s ₱250,000, and almost no one’s routine giving ever crosses that line. The tax is really aimed at large transfers — property titles, big cash — and at non-family transfers.
The recipients matter enormously:
- Relatives within the fourth civil degree (spouse, children, parents, siblings, nephews, nieces, grandparents, and the equivalent in-laws): the 6% rate with the ₱250,000 shield.
- Strangers — anyone outside that circle: friends, unmarried partners, fiancés — are taxed at a flat 30% from the first peso, with no exemption (§99(B)). A ₱500,000 gift to a friend costs ₱150,000 in tax.
And note what is not a gift at all: support and education expenses you are legally obligated to provide under the Family Code. Paying your child’s tuition is not a taxable donation; transferring a condominium title to that same child is.
What counts as a gift
- Any transfer for less than full and adequate consideration — cash, land, shares, vehicles, jewelry. A car “sold” to a sibling for ₱1 is a gift taxed at fair market value, not at the peso on the deed.
- Valuation follows fair market value — land at BIR zonal value, listed shares at market price — the same discipline the estate tax uses. Nominal prices in the deed do not control.
- Net gifts: property given subject to an assumed mortgage is taxed on the value minus the assumed obligation.
- Void gifts don’t help: donations between living spouses are generally prohibited by the Family Code (Article 87) — you cannot route a transfer through your spouse to double the exemption.
The aggregation trap
Because the exemption covers the year’s total, not each gift, sequencing matters. A parent who gives ₱400,000 in January and another ₱100,000 in December owes ₱15,000 for the year — not the ₱9,000 a per-gift reading would suggest. Filing is per donation (BIR Form 1800 within 30 days of each gift), computed cumulatively: the December return taxes the full ₱100,000 because the year’s exemption was already consumed in January. The full worked table is in our examples page.
Not deductible — with a philanthropy exception
A frequent question: does giving reduce the giver’s own taxes? No. Personal gifts to individuals are never deductible from income tax, and the donor’s tax itself is not deductible either. If you earn ₱2M and give ₱1M to your child, you still pay income tax on the full ₱2M plus donor’s tax on the transfer — double exposure, by design.
The exception is philanthropy: donations to the government or to BIR-accredited charitable, religious, educational, or cultural institutions may be exempt from donor’s tax (Section 101) and deductible from gross income — generally capped at 10% of taxable income for individuals and 5% for corporations (donations to the government itself are uncapped). The recipient, in all cases, pays nothing: gifts are not income to the donee.
Filing, paperwork, and zero-tax gifts
The donor files BIR Form 1800 within 30 days from each donation and pays at that time, with later filings crediting tax already paid that year. For purely cash gifts under ₱250,000 in a year, generally nothing needs to be filed. For titled property — land, condominium units, shares — a return showing the computation is needed in practice even when the tax is zero, because the Registry of Deeds will not transfer title without the BIR’s Certificate Authorizing Registration.
Gift now vs. hold until death
Donor’s tax and estate tax share the same 6% rate but differ in shields and timing:
- Donor’s tax: ₱250,000 shield per year — a gifting program spread across years multiplies it (and both parents are separate donors, each with their own exemption). A December/January split shields ₱500,000 in one week.
- Estate tax: ₱5M + ₱10M family-home shields, but only once, at death.
- Every gift also shrinks the future estate — often the entire point of lifetime gifting.
- If the recipient later sells the gifted property, the 6% capital gains tax applies to that sale — transfer taxes stack across transactions.
Run your own numbers
Enter your total gifts for the calendar year — the calculator applies the ₱250,000 exemption and shows the breakdown.
Open the Donor’s Tax CalculatorFrequently Asked Questions
Is every gift of value taxed?
Every gift is countable, but most owe nothing. All gifts by one donor in a calendar year are added together, and only the total above ₱250,000 is taxed at 6% for family recipients. Routine birthday money, holiday gifts, and remittances almost never cross the threshold. Gifts to strangers, however, are taxed at 30% from the first peso with no exemption.
What counts as a gift for donor’s tax?
Any transfer of property for less than full and adequate consideration — cash, land, shares, a car sold to a relative for a nominal price, or debt forgiveness. The value taxed is fair market value, not the price on the deed; property given subject to an assumed mortgage is taxed on the net value.
Are gifts tax-deductible for the giver?
No. Personal gifts to individuals are never deductible from income tax, and the donor’s tax itself is not deductible. The exception is philanthropy: donations to the government or BIR-accredited charitable, religious, educational, or cultural institutions may be exempt from donor’s tax and deductible from gross income, capped at 10% of taxable income for individuals and 5% for corporations.
Is support or tuition for my children a taxable gift?
No. Support that you are legally obligated to provide — including education expenses within your means under the Family Code — is not a donation. Donor’s tax applies to transfers of property beyond that obligation, such as gifting a condominium title to an adult child.
Do I need to file anything for an exempt gift?
For purely cash gifts under ₱250,000 in a year, generally nothing is required. For titled property — land, condominium units, shares — a return showing the computation is needed in practice because the Registry of Deeds will not transfer title without the BIR’s Certificate Authorizing Registration, even when the tax due is zero.
Sources: National Internal Revenue Code Sections 98–101 as amended by the TRAIN Law (RA 10963); Family Code Articles 87 and 195–196. This guide is general information, not tax advice — for filing, consult the BIR or a qualified tax professional.