Shrnutí: Parents sometimes decide to give their house or apartment to their children. Unfortunately, however, we also encounter cases that don’t go smoothly—donating real estate can sometimes strain already tense relationships, and the donor doesn’t know how to resolve the situation. So what are the downsides of donating real estate, and what should a good contract include?
Donors sometimes transfer real estate to the recipient, which is often their only home. Although they give it of their own free will, they want to be sure that they will be able to continue living with dignity in the house or apartment. The most common and also the most sensible solution is therefore to establish a life estate, sometimes also referred to as a right of use. We therefore recommend including the donor’s life estate (right of use) in the gift deed itself and having it registered in the real estate cadastre at the same time as the new owner.
Sometimes these easements and their terms can be quite complicated, but the purpose is clear—no one can then evict the donor from the apartment or house against their will, even if they are no longer the owner.
However, we are increasingly encountering cases where the donee needs financing and attempts to use the property as collateral with a bank. Banks, however, are not interested in providing mortgages on houses or apartments that are encumbered by a life estate. The donor should therefore be aware that while the life estate protects them, it significantly reduces the property’s value and limits its marketability. It is therefore important to consider in advance whether donating real estate subject to a life estate will affect the donee’s plans. Donating property can also lead to complications if the donee has debts or is facing insolvency. This is because a gift agreement entered into during insolvency may result in the gift being returned to the estate and sold to settle debts. For this reason as well, we recommend checking the insolvency registry before the transfer.
By its very nature, a gift is an expression of goodwill that is not usually revoked. Nevertheless, the Civil Code provides for two situations in which the return of a gift may be demanded. The first is the so-called revocation of a gift due to ingratitude. These are cases where the recipient intentionally or through gross negligence causes harm to the donor. The most common examples include failure to provide necessary assistance during a serious illness, severe insults, violence, or long-term blatant contempt. This is not, therefore, a mere family quarrel, but a truly serious breach of the recipient’s moral obligations.
The second reason is revocation of the gift due to financial hardship, when the donor finds themselves in a situation where they lack the means to provide even for their own basic needs or those of their dependents.
Tip: Most gifts are more symbolic than anything else. You might give a friend a book or a pair of silver earrings for her birthday; sometimes you might “splurge” and give a loved one a watch, for example. But if a misunderstanding or argument arises later over it, you’ll just shrug it off. These things happen sometimes. But what if you give something truly substantial? Say, a car or a piece of real estate to your child for passing their final exams? And a year later, you deeply regret it. Can you revoke the gift? And what should you do if you’re on the recipient’s side and the giver wants the gift back?
We’ll take care of the entire process for you. We’ll draft a precise, customized gift agreement, handle the life estate, resolve tax issues, assess the risks associated with insolvency, and ensure a flawless application for registration in the land registry.
The donor has one year from the time the donee caused him harm to revoke the gift (withdraw from the gift). An exception applies if the harm was caused indirectly to the donor or to someone close to him. In such a case, the time limit begins to run from the time he learned of the harm. In some cases, the right to revoke a gift even passes to the donor’s heirs. This occurs if the donee prevented the donor from revoking the gift before the donor’s death. Naturally, this may also involve an extreme situation in which the donee kills or maims the donor.
By law, the donation of real estate requires a written contract that must be notarized. Only the owner of the real estate may donate it. The recipient (donee) is the person who receives the real estate as a gift.
Ownership of the real property is established not by signing the contract, but only when the gift contract is registered in the real estate cadastre. Under the Land Registry Act, the legal effects of the registration take effect based on a final decision authorizing it at the moment the application for registration is delivered to the competent land registry office.
However, the gift agreement itself is not merely a formality. It is necessary to accurately describe the real property being transferred, provide the identifying information of the parties, state the market value (if required by authorities or banks), settle any encumbrances, specify any conditions, and define the method of transfer.
In addition, it is becoming increasingly common to include a provision allowing for the revocation of the gift in order to prevent future disputes.
As for the cost of drafting a gift deed, it typically ranges from two to ten thousand crowns, depending on the complexity. More complex deeds involving easements, conditions, or multiple donees may be more expensive. Many people look for a free gift agreement template, but these templates tend to be inaccurate, outdated, and often fail to address key issues such as easements, insolvency, or the protection of the donor. Although the Civil Code defines the general requirements for a gift agreement, the specific wording must be much more precise in practice.
Notary fees vary depending on the value of the property and the scope of the required service. The cost of a notary-certified gift deed can range from three to eight thousand crowns. The advantage is that the notary guarantees the accuracy of the verification, but a notarial deed is not mandatory.
What if the donor favors only one of their descendants by transferring an apartment to them? A gift can indeed affect the inheritance. This is because the mandatory share of the inheritance for the deceased’s descendants includes anything they received free of charge in the three years prior to the deceased’s death (this period can be extended further in a will ). However, such calculations do not take into account customary gifts (e.g., Christmas gifts). In practice, one can imagine a situation where a mother gifts an apartment worth 6,500,000 Kč to one of her three sons shortly before her death. She then leaves behind only 300,000 Kč in cash and personal property of virtually no value. Each of the sons would be entitled to 100,000 Kč from the estate. However, one has already received an apartment far exceeding this value, so he will receive nothing, and only the other two will share the estate. This, however, does not come close to compensating them for their total “loss.” On the other hand , the son who previously received the gift need not worry that he would have to divide the gifted apartment or reimburse his siblings retroactively.
Gifting must therefore be carefully considered, and the gift agreement should not be underestimated.
There is no longer a gift tax. Therefore, only income tax applies. The donor has no income; on the contrary, they are losing assets, so they cannot have a tax liability. The recipient, however, receives income. If the transfer is between close relatives (e.g., within a family), it is exempt from tax. If not, the recipient must include the gift in their annual income and pay tax on it along with their other earnings.
Tip: Parents often decide to give their house or apartment to their children. This is less expensive than the cost of settling an estate through probate. In addition, they retain control over how their assets are divided among their children, thereby preventing disputes over the property. Unfortunately, however, donating real estate can sometimes strain already tense relationships. In such cases, it’s worth establishing an easement. How do you do that? We cover this in a separate article.
A real estate gift deed remains one of the most common ways to transfer property between parents and children, but it carries a number of pitfalls that must be addressed when drafting the agreement. It is essential to protect the donor through a life estate, which guarantees the donor the right to continue using the property, even though it simultaneously reduces the market value and makes financing or sale more difficult. Under certain circumstances, the gift may be revoked—either due to the donee’s ingratitude or because the donor finds themselves in financial distress—with the law setting a one-year deadline for exercising this right. Gifting also significantly affects inheritance, as the value of the gift is included in the heirs’ statutory share, which can lead to an uneven distribution of the estate. A gift agreement must be in writing, precise, and include certified signatures, as well as provisions regarding easements or the possibility of revoking the gift. A notarial deed is not mandatory but may be advisable; the fee for drafting the contract typically ranges in the thousands of crowns. Gift tax no longer exists; however, the donee may be required to tax the gift as income unless the donee is a close relative. Complications may also arise in situations related to the donee’s insolvency or when using outdated free contract templates. Overall, donating real estate is safe and advantageous when the contract is carefully prepared with future risks and family relationships in mind.
Gift tax no longer exists as a separate tax; however, gifts of real estate are now treated as part of income tax. If a gift agreement is entered into between related parties, the gift is tax-exempt. For other individuals, a gift agreement may have tax implications, and the recipient must report the gift on their tax return in accordance with the rules set forth in the Civil Code and the Income Tax Act.
The cost of a gift deed depends on the complexity of the transfer, especially if the deed includes an easement or specific conditions. The cost of drafting a gift deed typically starts at around two to three thousand crowns; more complex deeds may cost even more. If a notary is required, the notary’s fee for a gift deed ranges from three to eight thousand crowns, depending on the value of the property and the scope of services.
Free gift deed templates are usually only general in nature and do not include important requirements stipulated by the Civil Code or land registry regulations. Such templates generally do not address easements, revocation of the gift, insolvency risks, or protection of the donor. Therefore, a gift agreement template is suitable only for very simple transfers without specific details; when applied to real estate, its use may lead to errors or disputes.
A gift made in the event of death is invalid under the law, because a gift agreement can only transfer property during the donor’s lifetime; a will must be used to transfer property after death. With regard to gift agreements in insolvency proceedings, transfers made to a person in insolvency may be challenged by the insolvency administrator as transactions without adequate consideration, and the gift may be returned to the estate.
A gift agreement for a dog is governed by the Civil Code in the same way as the gifting of any other item, but it is necessary to provide proof of the dog’s identification, its vaccination record, and to update the breeder registry. In the case of real estate, on the other hand, it is common to arrange a gift agreement with a real servitude so that the donor can continue to use the property. Although both agreements are based on the same legal framework, the practical requirements differ significantly.
We will provide you with a complete legal service related to real estate donation, including a proposal for entry into the Land Registry. We will also advise you on how to deal with taxes in the most advantageous way. We will handle everything quickly and flawlessly, so you don’t have to worry about a thing. You can pay after the service has been provided.
Ondřej is the attorney who came up with the idea of providing legal services online. He's been earning his living through legal services for more than 15 years. He especially likes to help clients who may have given up hope in solving their legal issues at work, for example with real estate transfers or copyright licenses.
Ondřej is the attorney who came up with the idea of providing legal services online. He's been earning his living through legal services for more than 15 years. He especially likes to help clients who may have given up hope in solving their legal issues at work, for example with real estate transfers or copyright licenses.
We’ll review your case and suggest how to resolve it for CZK 690.
In person and online. Just choose the appropriate service or opt for an independent consultation when you are unsure.
