Donating your property - what to bear in mind!

How to make a gift of your property

In order to make a gift of your property to a relative, a notarised deed of gift is required. If the gift is to the property in which you currently live, you should also secure the right of residence or, if you are renting, the right to live in the property Renting the usufructuary right. Both are recorded in the land register and ensure that you can continue to live in the property after the donation or receive the rental income generated.

Gift tax allowances

Taxes are also levied by the state on gifts. However, depending on the relationship and the value of the gift, there are different allowances which, if observed, mean that you do not have to pay gift tax. These allowances are as follows:

• Spouses and civil partners: €500,000

• Children, stepchildren and adopted children as well as grandchildren whose parents are deceased: 400.000 €

• Parents, grandparents as well as non-relatives: € 20,000

Can gifts be reclaimed?

In principle, it can be difficult to reclaim a gift after the fact. According to the law, there must be serious reasons for this. One of these reasons, which the law stipulates, can be the impoverishment of the donor. If the donor is unable to provide for adequate maintenance after the gift, he or she can demand that the donee return the gift. However, these claims may be forfeited under section 529 if the donor has caused his indigence intentionally or through gross negligence or if more than 10 years have elapsed since the gift was made at the time his indigence occurred.

Giving away real estate - how is the value calculated?

For the donation of a property, its market value is decisive. In the case of a gift, this is determined by the Valuation Act. As the owner in such a case, you naturally want the value of the property to be assessed as low as possible in order not to exceed any tax allowances or to keep the gift tax levies low. In this course, the donor has the possibility of proving a lower value if the determined market value appears too high to him. Since numerous factors determine the final value, comprehensive expertise and sound knowledge of the real estate market are required. It is therefore advisable for Valuation of the property an experienced Real estate agent for the valuation of the property.

Does the market value of your property significantly exceed the tax-free amount? One alternative is to sell the Sell the house at a profit and divide the gift in such a way that the tax-free amount is not exceeded. All tax-free allowances are subject to a 10-year period, after which a new tax-free gift is possible.