Gift giving as a legal institution is a common feature of everyday life. However, gifts of real estate are much less common than gifts of small value. In the case of real estate, it is also a free transfer of property, but it is more complicated than a gift of movable property, as a gift contract signed by a lawyer is required.
The costs of making a gift are the lawyer’s or notary’s fees, the title deed and the costs of the land registry. The tax liability is the most significant expense for gifting, at 9% for residential property and 18% for other real estate (garage, land, etc.), determined by the tax authority on the basis of the market value of the contract. If the amount stated in the contract does not correspond to the fair market value, the tax authority will determine the fair market value based on the estimated market price of the surrounding properties in the area where the property is located, which will form the basis for the tax liability.
In certain cases, the law provides for exemption from fees. This is the case of gifts between direct relatives, spouses or siblings. There is an additional exemption for donations of agricultural land if the parties are close relatives or if the donation is made to the church, the state or local government.
The party is exempted from the obligation to pay the levy if, in the case of land, the donee builds a dwelling house within 4 years.
No tax liability arises from the gift contract because the contract does not generate income for either party.
