A deed of gift is a convenient legal instrument that allows you to give an apartment, house or land plot to another person, most often a relative. Let us consider the important nuances of this procedure: how to gift, what documents are required, how much to pay, what are the disadvantages and risks, etc.
What is a deed of gift
As stated in Article 717 of the Civil Code of Ukraine, a deed of gift is a document that confirms the transfer of ownership from the giver to the giver on a gratuitous basis, i.e. free of charge.
It is possible to transfer ownership of the property either immediately or in the future with prescribed conditions for the occurrence of the gift (wedding, birth of a child, etc.). In any case, the apartment or house is transferred to the giver free of charge, without expecting anything in return. If real estate is given to one of the spouses in marriage, the second spouse has no right to claim it.
A deed of gift is only in writing and must be executed and notarized.
How a deed of gift differs from a will
A will and a deed of gift are completely different legal instruments that have drastic differences.
When transferring an apartment or other property by will:
- title to the object passes only upon the death of the testator;
- the owner can sell, gift, exchange the apartment or take a loan against the real estate, as a result, there will be nothing to inherit after the death of the testator;
- The testator can change or revoke the will at any time;
- an heir may not receive the inheritance in full under the will if other heirs are declared who are entitled to a compulsory share of the inheritance regardless of what is stated in the will.
What are the differences between transferring a home under a deed of gift and a will? Usually, the donated real estate is immediately transferred into ownership. The deed of gift cannot be unilaterally canceled. Other claimants to the inheritance will not be able to claim this living space.
Is it possible to execute a deed of gift for a share in an apartment
It is possible to draw up a deed of gift for a share in an apartment, but the procedure for drawing up the agreement will depend on the form of ownership: common shared ownership or common joint ownership. How it is done in each case:
- common share ownership - if each co-owner owns a certain part of the property, each of them has the right to gift their part without the consent of the other owners;
- common joint ownership - if the shares of the owners are not determined, the consent of all co-owners must be obtained in order to conclude a transaction under a deed of gift. If there is no consent, you cannot donate your part of the living space.
Can a deed of gift be challenged
The grounds for canceling a deed of gift for an apartment can be found in Article 727 of the Civil Code of Ukraine.
What are some reasons to terminate a deed of gift:
- criminal offense - if the court has issued an actual criminal conviction against the giver, i.e., the giver has committed a serious crime against the giver or his relatives;
- mental illness - if it is established that the donor is mentally ill, that is, he did not realize his actions at the time of execution of the deed of gift, but in this case, most likely, will have to go to court, as the notary had to make sure of the adequacy of the donor at the time of the transaction.
It is possible to terminate a deed of gift without going to court only by mutual consent of both parties: the donor and the donated person. The procedure is carried out at a notary and is fixed by an appropriate agreement. The gifted property again becomes the property of the donor.
A deed of gift can also be challenged by recognizing the transaction as fictitious. If the terms of the transaction are not fulfilled, i.e. the donor cannot use and dispose of the apartment, the court may recognize such a transaction as fictitious.
If there are grounds for rescission of the deed of gift, you can appeal to the court within 1 year from the date of the transaction (Article 728 of the Civil Code of Ukraine). Lawyers argue that you can challenge any contract, the main thing is to meet the deadline and have good reasons or evidence. If the court recognizes the given arguments as valid, the deed of gift will be recognized as invalid or a decision will be made to terminate it.
What are the disadvantages of a deed of gift
There are several disadvantages to entering into a deed of gift. After a deed of gift is executed, the donor may apply to the court to terminate the agreement for one of the following reasons:
- he signed the contract because he was threatened;
- the giftee has committed a crime against him or his relatives;
- he was given the money, so the deed of gift was not a gratuitous transaction;
- the donor threatens to destroy or damage property of cultural, historical or other value to the donor;
- he has been deceived or misled about the legal consequences that come after signing a contract.
Another disadvantage is the amount of taxes in the case of a deed of gift between strangers. If the deed of gift is not between relatives of the first or second degree of kinship, the giver will have to pay a tax of 5%, as well as a military tax of 1.5%.
What are the risks of buying an apartment under a deed of gift
If a deed of gift is used to cover a sale and purchase transaction, there are certain risks for both the seller and the buyer. The latter runs the risk of being left both without money and without real estate.
The main essence of a donation transaction is the transfer of housing to another person free of charge. If it covers a real sale and purchase transaction, the fact of the transfer of money from one party to another, which is confirmed by a receipt, may be the basis for recognizing the transaction as invalid. In such a situation, the gifted housing is returned to the donor. An important point - the seller may not return the money to the buyer, as from the legal point of view he did not receive any payment.
Lawyers categorically do not recommend covering up a sale and purchase transaction with a deed of gift. The imaginary benefits of tax savings do not outweigh the risks and possible unpleasant consequences. The buyer may lose a substantial amount of money and be left without an apartment.
How to execute a deed of gift
A deed of gift is always executed before a notary. The document can be concluded both at the place of registration of the donor or the donated person, and at the location of the immovable property. Simply put, in the locality where you want to execute a deed of gift, there must be an apartment (house, plot) or be registered as a party to the transaction. The parties choose the option that is more convenient for them.
If both parties to the transaction are registered in Kyiv, and they plan to execute a deed of gift for an apartment in Borispol, it will not be possible to conclude the transaction at a notary, for example, in Lviv or Dnipro.
In order to execute a deed of gift, it is necessary to collect the necessary package of documents and apply to a public or private notary. Both parties - the donor and the donated person - must be present during the transaction.
Once the deed of gift is executed, the notary registers the transaction according to the deed and makes an extract from the State Register of Property Rights for the new owner. At that moment, the donor loses the right of ownership, while the donor acquires it.
What documents are required to execute a deed of gift
You will need the following documents to execute a deed of gift:
- certificate of title;
- a document on the valuation of the real estate object;
- certificate of persons registered in the apartment;
- written consent of the spouse to the donation transaction, if the housing was purchased during marriage;
- permission of the guardianship and custody authorities, if the donor is a child under 18 years of age or if there are children registered in the apartment.
After the transaction has been formalized, the donor receives a deed of gift from a notary and an extract from the State Register on the registration of ownership rights. From that moment on, he is the legal owner of the apartment received as a gift.
How much does a deed of gift cost at a notary's office
As mentioned above, you can execute a deed of gift with both a public and a private notary. The cost of execution at them is almost the same. The price for the services of a public notary may be slightly lower, but you should be prepared for long queues and the fact that you will have to wait a long time for the transaction to be processed. To formalize everything quickly and conveniently, it makes sense to turn to a private notary.
How much a deed of gift will cost in 2024 depends on who and to whom the apartment is being gifted. The amount of taxes and fees will be different when donating housing to a relative, an acquaintance or a foreigner.
Expenses when donating an apartment to a relative of 1-2 degree of consanguinity
If a donor wants to gift his or her real estate to a close relative, the donor will not have to pay taxes. Who are close relatives of the 1st or 2nd degree of consanguinity? These are children, parents, spouse, further - brothers, sisters, grandchildren, grandparents.
When a deed of gift is made out to a relative from the list above, it is possible not to carry out an appraisal of the living space. It is worth clarifying that not every notary will agree to execute a deed of gift without a document on the valuation of the apartment. It is best to ask a specialist about this in advance.
The cost of executing a deed of gift with a close relative usually does not exceed 10,000 hryvnias, in addition to state duty. What costs there are in this case:
- real estate appraisal - from 1000 UAH (the final cost of the appraisal depends on the urgency of the procedure);
- drawing up a deed of gift - from UAH 4,500 (depends on the notary's rates);
- registration of the contract in the State Register - UAH 2,500;
- state duty - 1% of the real estate value.
Expenses when donating housing to an outsider
If the apartment is donated not to a relative of the 1st or 2nd degree of kinship, but to a distant relative or a stranger, the giver will have to pay a tax of 5% and a military levy of 1.5% of the value of the property.
In order to determine the amount of tax, you will need an expert assessment of the object before the transaction. This is an additional cost, which in most cases starts from 1000 hryvnias. As in the first case, it is also necessary to pay for the services of a notary.
Expenses when donating real estate to a foreigner or by a foreigner
A deed of gift may be executed from a non-resident to a citizen of Ukraine or vice versa - from a citizen of Ukraine to a non-resident. In this case, the family connection does not matter. In both situations, the giftee has to pay tax at the rate of 18% and military duty of 1.5%.
When executing a deed of gift where one of the parties has citizenship of another country, it is necessary to have the property appraised beforehand. In addition to taxes, it is necessary to pay for the services of an appraiser and a notary.
If the donor is a citizen of Ukraine, he/she must pay the above taxes after filing a declaration at the place of registration. The declaration must be filed by May 1 of the year following the reporting year.
If the giftee is a non-resident, he/she must pay the tax before notarizing the deed of gift and provide the notary with a receipt of payment.
A deed of gift is a good way to transfer property to another person for free. But before executing the documents, it is important to make sure that such a deal is best for your situation. If you are not sure about this, it is worth contacting a specialist. The real estate agency "Mayak" employs experienced lawyers and notaries who will advise on the issues of real estate donation and will help to formalize everything correctly and in accordance with the laws of Ukraine.
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