How to Properly Donate Real Estate

Quick Overview

If you’re considering how to donate real estate, the process begins with a written donation agreement and a subsequent application for registration in the land registry. The donee acquires ownership only upon registration in the land registry.

• In the agreement, clearly identify the donor, the donee, and all real estate or shares being transferred.
• It is advisable to have the signatures notarized; without notarization, you will need to provide proof of their authenticity to the Land Registry at a later date.
• An administrative fee of 2,000 CZK is payable for filing the application for registration.
• Gifting real estate to children is exempt from income tax because they are direct lineal relatives.
• If the donor intends to continue living in the house or apartment, the transfer can be combined, for example, with a right of residence.

Do you want to transfer an apartment, house, or plot of land without the risk that the Land Registry will reject the application due to an error? Contact us, and we’ll prepare a gift deed and the application for registration, and, if necessary, we’ll also set up an easement to protect the donor.

You can gift real estate to your children, other relatives, or even someone outside the family. The transfer process itself is similar, but the tax treatment may vary, as may the rights the donor retains under the agreement. A properly drafted gift agreement will help you avoid future problems and unnecessary conflicts.

How to Donate Real Estate: A Step-by-Step Guide

A real estate gift agreement and the transfer process involve several basic steps. First, verify the exact designation of the house, apartment, land, and any co-ownership shares based on the current land registry records. Then draft a written gift agreement in which the donor transfers the property free of charge and the donee accepts it. If the donor is to continue using the property or if you need to maintain access via another parcel of land, also stipulate the relevant easement at the same time.

After signing the agreement, submit an application on the prescribed form to register the ownership right in the land registry and attach the gift agreement. An administrative fee of 2,000 CZK is payable for the application. The donee becomes the owner upon registration of the ownership right in the land registry.

What do I need to donate a house?

• details of the donor and the donee
• Current information about the house and related parcels of land from the land registry
• a written deed of gift
• Any agreements regarding easements or other real rights
• Application for registration in the land registry
• 2,000 CZK for the administrative fee for registration

If you are transferring only a portion of the land, a survey map may also be required.

Most common mistake: inaccurate identification of the property

Kamila, a college student, had been caring for her sick grandmother for many years. However, she wasn’t actually her grandmother—she was a neighbor. Kamila had simply been helping her out until it turned into daily care. Although Kamila hadn’t expected it at all, the grandmother decided to gift her apartment to Kamila. The elderly woman wasn’t on good terms with her family, who showed no interest in her whatsoever.

The problem, however, was that neither the grandmother nor Kamila had consulted anyone. Kamila downloaded an old template for a gift deed from the internet, filled it out incompletely, and then she and her ailing grandmother signed the deed and submitted it to the land registry. It turned out, however, that they had incorrectly specified the share of the common areas of the building. They also forgot to include the share of the related land surrounding the building—that is, the garden.

Because of this error, the registration of ownership was not approved. In the meantime, however, the elderly woman passed away, and her apartment was inherited by her heirs through probate proceedings.

When transferring property—including when donating apartments— real estate is often transferred across multiple title deeds, a detail that is frequently overlooked. Each share must be explicitly identified; one must not forget to include either the share in the land on which the house and apartment stand or the share in the house itself. Under the new Civil Code, an apartment is defined differently than before, which can also lead to errors, especially when relying on an old contract.

Another common legal error can occur when donating a house. The new Civil Code has introduced the principle of *Superficies solo cedit*. Translated, this means “the superstructure yields to the land, ” implying that the structure is part of the land. However, this principle is not applied consistently, and houses and land are only gradually being consolidated. Therefore, even today, a house is not necessarily part of the land. It may happen that, when making a gift, only the land without the house—or the house without the land—is mistakenly transferred. All of this must be clearly addressed in the contract.

A real estate gift agreement must be in writing. We recommend having the signatures officially certified, for example, by a notary, an attorney, or at a Czech POINT office. If the signatures are not notarized, the applicant must prove their authenticity to the Land Registry; if this is not done within the specified time limit, the Land Registry may suspend the proceedings.

Donation of Real Property and Easements

Many people are aware of all the risks and try to prevent problems right from the start when drafting a gift deed. Take Ms. Martina, for example, who contacted us some time ago because she needed to transfer land in South Bohemia to herself and her brother as quickly as possible and under the best possible terms. Their parents wanted to donate the land to them. She was afraid of making a mistake. This is because a road leading to one of the parcels was part of the other parcel. This is a potentially legally complex situation. We recommended that Ms. Martina draft a gift deed for the land that included a right of way.

In practice, this means that the road will remain the property of Ms. Martina’s brother, who was to receive the adjacent parcel. However, she—as well as any future owner of her parcel—will retain the right to access her property via this very road. A deed of gift for the properties drafted in this manner can prevent many future problems, such as if one of the siblings were to move away and the new owner turned out to be a difficult person.

An easement is also often established when real estate is gifted to children. If a parent transfers a house or apartment to a child but wishes to continue living in the property, an easement or right of use can be established at the same time and registered in the land registry. Although the donor ceases to be the owner, their right to use the property to the agreed extent remains legally protected.

It is particularly important when gifting real estate and establishing an easement to precisely define which areas the donor may use, whether the easement is free of charge, and who will bear the costs associated with living in and maintaining the property.

Are you donating a property in which you intend to continue living? Let our attorneys structure the easement in conjunction with the deed of gift so that it is clear what rights you retain even after the transfer of ownership.

Real Estate Gift Tax: When Is No Tax Due?

A separate gift tax is no longer payable. Under the Income Tax Act, a gift is now treated as non-taxable income for the recipient. The donor does not receive any income and therefore does not owe income tax on the gift itself.

Gifting real estate to children, grandchildren, or parents is exempt from income tax because they are direct lineal relatives. The exemption also applies to other persons expressly listed in the law, such as siblings, spouses, uncles, aunts, nephews, or nieces. Under certain conditions, a gift from a person with whom the recipient lived in a shared household for at least one year immediately prior to the gift may also be exempt.

If the conditions for the exemption are not met, the recipient must report the gift as income for income tax purposes.

Revocation of a Gift

A gift is not necessarily settled once and for all by its registration in the real estate registry. In certain cases, a so-called “revocation”—that is, the formal withdrawal of the gift—may be considered. The law generally provides for two possible grounds for this. First, there are cases where the donor falls into financial hardship. This means that the donor cannot afford even the basic necessities for themselves or for anyone dependent on them. In such a case , the donee is obligated to return the gift to the donor or to pay the donor the fair market value of the gift.

More common, however, is the revocation of a gift due to so-called ingratitude. Ingratitude is considered to be a situation in which the donee intentionally or through gross negligence causes harm to the donor. This does not refer to a heated argument, but rather, for example, a failure to provide assistance during illness or even a criminal offense committed against the donor or a person close to them. However, each case is evaluated individually and on a case-by-case basis. Ultimately, it is the court that decides what constitutes ingratitude.

The donor has one year from the moment the recipient harmed him or her to revoke the gift. The donor may revoke the gift on the grounds of ingratitude within one year of the date on which the recipient harmed him or her. If the donor learns of the grounds for revocation only later, the one-year period begins on the date the donor becomes aware of them. Under certain circumstances, a clear violation of good morals toward a person close to the donor may also constitute ingratitude.

The right to revoke a gift on the grounds of ingratitude may also pass to the donor’sheirs if the donee prevented the donor from revoking the gift or if force majeure prevented the donor from doing so. An heir may revoke the gift no later than one year after the donor’s death. In practice, one can imagine, for example, a situation in which one of the siblings kills a parent during an argument, even though the parent had previously gifted the sibling a house. The other heirs will then seek to reclaim the house and may revoke the gift.

Summary

The donation of real estate requires a written gift agreement and the subsequent registration of ownership in the real estate cadastre, for which an administrative fee of 2,000 CZK is payable. The agreement must precisely identify all real estate and shares being transferred and, depending on the situation, also address easements—such as the donor’s right to continue living in the donated house or apartment. Gifting real estate to children and other relatives defined by law is exempt from income tax, while for gifts outside this category, the tax implications must be assessed on a case-by-case basis. Under the Civil Code, a gift may be revoked due to hardship or ingratitude; in the case of ingratitude, the statutory one-year time limit must be observed.

We prepared this article for the “Law & Housing” series in Lidové noviny. Be sure to check out other articles in the series:

1. What to Watch Out for When Buying Real Estate
2. How to Get a Mortgage
3. What to Check Before Buying a Property
4. Who Pays Real Estate Transfer Tax and How?
5. What a real estate purchase agreement should include
6. Common Mistakes When Drafting a Land Registry Application
7. Buying a Property from a Developer
8. Escrow of the Purchase Price When Buying Real Estate
9. The difference between a cooperative apartment and a privately owned apartment
10. What Is an Annuity?
11. How to Properly Donate Real Estate
12. What is the purpose of an easement?
13. Drafting a Will and Settling an Estate
14. What Is a Collation?
15. What Should Be Included in a Lease Agreement
16. When Can Rent Be Increased?
17. Termination of a lease
18. Agreement to Terminate a Lease
19. How to Draft a Contract for Work with a Tradesperson
20. Hidden Defects and Withdrawal from a Contract for Work
21. When Do You Need a Building Permit to Renovate a Property?
22. House Rules
23. What Does a Position on an Apartment Building Committee Entail?
24. Why You Shouldn’t Underestimate the Bylaws of an Apartment Building
25. Common Areas in an Apartment Building
26. What Is Involved in Renovating an Apartment Building?
27. Can a homeowners’ association or housing cooperative go into debt?
28. How to Approach the Renovation of a House or Cottage
29. What to Watch Out for When Dealing with a Construction “Company”?
30. Building a house on a “greenfield site”
31. How to Remove Land from the Agricultural Land Fund