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Real estate deed of gift: what are the pitfalls and possibilities?

Parents often choose to give their house or apartment to their children. Unfortunately, however, we also encounter cases that do not go smoothly – the donation of property sometimes inflames already strained relationships and the donor does not know how to get out of it. So what are the downsides of gifting property and what should a good contract contain?

nemovitost, daň z nemovitosti, darování nemovitosti
5 minutes of reading

Chapters of the article

How to protect donors?

Often the donor does not have a house or apartment other than the one he or she is transferring to his or her children or other relatives. He or she wants to continue to live there with dignity. We therefore recommend that the donor’s survival easement (usufruct) be included in the gift agreement itself and that it be registered in the Land Registry at the same time as the new owner.

Sometimes easements and their conditions are quite complicated, but the meaning is clear – no one can then evict the donor from the apartment or house against his will, even if he is no longer the owner.

However, it is important to remember that the registration of an easement in the Land Registry reduces the value of the property. It can be very difficult, if not impossible, to obtain a mortgage from a bank and even if the property is sold, the sale price will be well below the current market price.

Can the gift be taken back?

Withdrawal of a gift is provided by law for two types of situations. First, these are cases where the donor falls into distress. That is, he or she does not have the means to support himself or herself or a dependent. In such a case, the donee is obliged to return the gift to the donor or to provide him with the usual value of the gift.

What is more common is the revocation of the gift for so-called ingratitude. Ingratitude is when the donee intentionally or through gross negligence harms the donor. This does not mean, for example, a tense argument, but perhaps a failure to provide assistance in a serious illness.

Tip: Most gifts have a rather symbolic value. You can give your friend a book, silver earrings, sometimes you might “slap your pocket” and give your loved one a watch. But in case of a later mutual misunderstanding or quarrel, you simply wave your hand over it. That just happens sometimes. But what if you give something really big? Like a car or a property for your offspring’s graduation? And a year later, you regret it. Can you revoke the gift? And what do you do if you’re on the donor’s side and the donor wants the gift back?

Donation of real estate

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.

The donor has a period of one year to revoke (withdraw) the gift from the moment the donee has wronged him/her. The exception is if the donor has harmed the donor indirectly or a person close to the donor. In such a case, the time limit starts to run from the moment he became aware of this. In some cases, the right to revoke the gift even passes to the donor’s heirs. This is the case if the donee prevented him from revoking the gift before his death. Naturally, this can also be an extreme situation where the donor is killed or mutilated by the donee.

What about the contract itself?

A gift of real estate requires by law a written contract, which must be notarised. Only the owner of the property can make a gift. The recipient (donee) is the person who receives the property as a gift.

Ownership of the immovable property is only established when you enter the donation agreement into the Land Registry. According to the Cadastral Act, the legal effects of the entry occur on the basis of a final decision on its authorisation at the moment when the proposal for registration has been delivered to the competent cadastral office.

Does the donation have any effect on the subsequent inheritance?

What if the donor favours only one of the descendants by transferring the apartment? A gift can indeed affect the succession. What the descendants of the deceased have received free of charge in the last three years before his death (this period can be extended in the will ) counts towards the mandatory share of the inheritance. However, the usual gifts (e.g. Christmas presents) are not taken into account in this way. In practice, one can imagine a situation where a mother gives one of her three sons an apartment worth CZK 6,500,000 shortly before her death. She then leaves only cash of CZK 300,000 and movable assets of virtually zero value in her estate. Each of the sons would be entitled to CZK 100 000 from the estate. However, one has already received an apartment far in excess of this value, so he will receive nothing and only the other two will share. However, this does not compensate them for the total “loss”. On the other hand, the formerly gifted son does not have to worry about having to divide the gifted apartment or pay his siblings back.

Therefore, the donation should be well thought out and the gift agreement should not be underestimated.

What about tax?

Gift tax is no longer payable. Therefore, only income tax is applicable. The donor does not have any income, but loses the property, so there is no tax liability. However, the donor receives income. However, if the transfer is within the family (e.g. within the family), it is also exempt from tax. If not, he includes the gift in his full-year income and taxes it together with his other earnings.

Familiarize yourself with our offer and treat the risks involved in gifting real estate.

Tip: Parents often choose to give their house or apartment to their children. This is cheaper than the cost of settling the estate in probate. In addition, they have control over the division of their assets between their children and can avoid arguments over property. Unfortunately, however, it also happens that gifting property will inflame already strained relationships. In such cases, it pays to set up an easement. How to do it? This is the subject of a separate article.

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Donation of real estate

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.

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Author of the article

JUDr. Ondřej Preuss, Ph.D.

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 10 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.

Education
  • Law, Ph.D, Pf UK in Prague
  • Law, L’université Nancy-II, Nancy
  • Law, Master’s degree (Mgr.), Pf UK in Prague
  • International Territorial Studies (Bc.), FSV UK in Prague

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