Deed of gift and contract of sale
When buying real estate, a contract of sale and purchase is concluded. This transaction involves the obligation to pay certain taxes and fees. In order to save money, some buyers and sellers decide to conclude a gift agreement rather than a sale and purchase agreement, as in the second case the costs are lower. Whether it is worth doing so, what are the differences between these contracts, whether it is necessary to conclude a contract of sale or a gift contract is also suitable - all this will be discussed in more detail below.
What is the difference between a gift agreement and a sale and purchase agreement
A contract of sale is a contract whereby the seller undertakes to transfer property into the ownership of the buyer, and the buyer undertakes to accept the property and pay a certain sum of money for it.
A deed of gift is a signed legal document by which one party transfers ownership of real property to another party voluntarily and without consideration. This contract is sometimes used as a hidden contract of sale for various reasons.
What is the difference between a contract of sale and a contract of gift:
In a deed of gift, the property is transferred at no cost, whereas in a contract of sale, the buyer has to pay the seller;
When property is purchased during marriage, it is owned by the spouses. When property is donated to one of the spouses, the other spouse is not its owner and cannot claim it.
It is extremely difficult to invalidate a contract of sale. It is quite realistic to challenge a gift agreement. The donor may cancel the contract if he or his family has been threatened, blackmailed, deceived, etc.
An object owned by a minor can be sold with the permission of the guardianship and custody authorities. At the same time, such an object cannot be donated.
When concluding a sale and purchase agreement, the limitation period is 3 years, when concluding a gift agreement - only 1 year.
When selling his/her part of the real estate, the co-owner must notify the other owners. They have a pre-emptive right to buy this part of the apartment or house. At the same time, you can gift your allocated part of the property without notifying the other co-owners.
The conclusion of a sale and purchase agreement and the conclusion of a gift agreement also provide for their own taxation peculiarities. When buying a home, it is necessary to pay personal income tax and military duty, which are calculated on the value of the real estate specified in the contract.
If we talk about taxes when concluding a donation agreement, then the amount of expenses will be affected by who and to whom the apartment is donated. Tax does not need to be paid when donating property to relatives of the first or second line. If the giver is not a close relative, he will have to pay a tax of 5% and a military levy of 1.5% of the estimated value of the object.
What is better - to make a gift or a sale and purchase agreement
If we are talking only about additional expenses and we are talking about a close relative, it is more favorable to conclude a gift agreement: you will not have to pay taxes. But there is also a risk factor, not only paying taxes.
Whatever the agreement, the buyer or giver becomes the owner of the property. But the type of agreement depends on how much he risks losing the acquired property and what the consequences of this loss may be.
If under the gift agreement the parties decided to hide another transaction - the sale of real estate, the buyer should understand that it is easy to appeal this agreement, that is, he runs a serious risk of being left without money and without the apartment. If the "seller" - the donor proves that in reality he did not want to conclude a gift agreement, the document may be recognized as invalid in court. In this case, it is nowhere indicated that the giver gave money to the donor, because, according to this type of contract, the property is transferred free of charge.
On what grounds a deed of gift may be appealed:
On general grounds;
imprisonment under the influence of mistake;
imprisonment under the influence of fraud;
imprisonment under the influence of violence;
imprisonment as a result of a malicious agreement between a representative of one party and another party;
conclusion under the influence of a grave circumstance.
Most often the initiators of the appeal are relatives of the donor, who could not get their benefit because of the conclusion of the transaction. If the court recognizes the contract as invalid, the property will return to the ownership of the donor: he will have both the real estate and the money received earlier.
A sale and purchase agreement can also be appealed, but in reality such situations are infrequent. Even if such a contract is recognized as invalid, the buyer will get his money back, or rather, the amount that was specified in the contract. That is why it is important to specify in the contract the real value of the real estate.
If there are questions about gift and sale contracts or it is difficult to understand all the nuances of the transaction in the sale of real estate, it is worth seeking advice in real estate agency "Mayak". Our realtors and lawyers will answer all questions and help to conclude a transaction without risk.
