04/03/2026
Choosing between a Deed of Donation and a Deed of Sale depends on your goal, taxes, and family situation in the Philippines. Here’s a simple way to understand when each is better.
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When a Deed of Donation is Better
Use a Deed of Donation when the property is truly being given for free, usually within families.
Best situations:
• Parents transferring property to children while still alive
• Giving property as part of estate planning
• Helping a family member start early in life
• Avoiding conflicts among heirs later
Pros
• Shows the transfer is a gift, not a sale
• Useful for inheritance planning
• Clear intention of the owner
Cons
• Subject to Donor’s Tax (6%) filed with the Bureau of Internal Revenue
• Once accepted, it’s generally irrevocable
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When a Deed of Sale is Better
Use a Deed of Sale when the property is being sold or transferred with payment, even if it’s to a relative.
Best situations:
• Buyer is actually paying for the property
• Safer legally if money is involved
• Clear proof of transaction
• Easier to justify property value
Taxes involved
• Capital Gains Tax – 6%
• Documentary Stamp Tax – 1.5%
• Transfer and registration fees
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Real-Life Scenario
Many families choose Deed of Sale even if the buyer is a child because:
• Sometimes taxes end up similar or cheaper
• It avoids questions from the Bureau of Internal Revenue about undervaluation or hidden donations.
