Real estate

Gifting real estate: who pays the tax and what is the tax base?

31 August 2026 / Regent Split

Summary

When real estate is gifted, the tax is paid by the donee (the one who receives the gift), and it is a real estate transfer tax — not a separate "gift tax." It is crucial that there are exemptions for closest relatives, due to which gifting within the immediate family is generally not subject to tax. The tax base is the market value of the real estate at the time of donation, and the rate is 3% where the tax is paid. In addition to the tax, gifting also requires a prescribed contract form and registration in the land registry.

Key facts

The gifting of real estate is subject to real estate transfer tax, and the donee is the obligor.
The rate is 3% of the market value of the real estate at the time of gifting.
Exempt are spouses, descendants and ascendants in direct line, and adoptees and adopters — but not siblings.
A real estate gift agreement requires a notarial deed or a solemnized document, not just signature authentication.
Gifting during one's lifetime can affect the forced heirship portion of other heirs.

Donating real estate is a common way to transfer property within a family — from parents to children, between spouses, and from grandparents to grandchildren. Unlike buying and selling, there is no price payment here: the property is transferred free of charge, out of a desire to transfer assets during the donor's lifetime. However, even a free transfer has its tax and legal aspects, and the question of tax — who pays it, how much it is, and what it is calculated on — is often unclear. Donation within the immediate family is tax-favorable, but "favorable" is not the same as "automatically without any tax, form, or cost". In this guide, we explain who pays the tax, how the tax base is determined, what exemptions exist, what form a donation requires, and how it affects other heirs — based on the Real Estate Transfer Tax Act, the Obligations Act, and the Inheritance Act.

What is real estate donation

Real estate donation is a legal transaction by which the donor gratuitously transfers ownership of real estate to the donee, who accepts the gift. An essential feature is gratuitousness — unlike buying and selling, the donee does not pay a price. This is precisely why donation is an attractive way to transfer property within a family, where the goal is to transfer real estate to loved ones during one's lifetime, rather than to monetize it. The concept of donation is regulated by the Obligations Act (Articles 479 et seq.).

Although gratuitous, donation is not without legal and tax consequences. The transfer of ownership is regulated by rules on taxation, form, and registration, just like other methods of acquiring real estate. Therefore, donation should be approached as seriously as buying and selling, so that the transfer does not later bring unpleasant surprises to either the donor or the donee.

Professional advice: Even when donating to your closest relatives, treat the donation as a serious legal transaction with form, tax, and registration. An informal "family agreement" without prescribed execution does not transfer ownership and can easily become a source of later disputes.

Who pays the tax and what is the tax base

When donating real estate, the donee pays the tax, specifically the real estate transfer tax — meaning there is no separate "gift tax" for real estate. The Real Estate Transfer Tax Act explicitly states that in the case of a donation, the obligor is the donee, i.e., the person who acquires the real estate free of charge (Art. 7). The donor has no tax obligation because they are giving, not acquiring, property. It is important to separate two questions: who is the tax obligor and who will actually pay the tax — because there is an exemption for close relatives.

The tax base is the market value of the real estate at the moment the tax liability arises (Art. 9), not the former acquisition price or a lower "paper" value from the contract; the Tax Administration can also estimate the value. The tax liability arises at the moment the contract is concluded (Art. 16). The rate is 3% (Art. 12), so for more valuable real estate, where tax is payable, the amount can be significant — which further emphasizes the importance of the exemption issue.

Professional advice: If the donation does not fall under an exemption, realistically estimate the market value of the real estate in advance — the tax is tied to it, so for more valuable properties, this is an item that needs to be planned, not discovered only when the decision arrives. The guide on real estate valuation can help with the assessment.

Exemptions: donation within the family

Exemptions are the core of the tax story in donations because they explain why donation within the family is usually tax-favorable. According to the Real Estate Transfer Tax Act (Art. 15), spouses, descendants, and ascendants in a direct line, as well as adopted children and adoptive parents, do not pay tax on donations. Therefore, gifting to children, grandchildren, parents, and between spouses are common and tax-acceptable ways of transferring property during one's lifetime.

It is crucial, however, not to assume who falls into this circle, as it is defined by law and is narrower than many think. From working with clients, we see that the most surprising fact is that siblings are not covered by this exemption — donating real estate to a brother or sister is generally taxed at a rate of 3%. A practical detail: those who are exempt do not receive a special exemption decision; decisions are only issued to those whose obligation is determined. The status of an extramarital partner is not explicitly stated in the law, but according to the Family Law Act and the practice of the Constitutional Court, it is treated equally as a marital partner — for a specific case, check this with the Tax Administration. You can also check the exemption conditions on the Tax Administration's website.

Professional advice: Does your family relationship fall within the circle of those exempt? Check this before donating, and do not assume — the difference between an exemption and its absence can mean a 3% tax on the full market value of the real estate.

Contract form and registration in land registers

Real estate donation requires a strict, legally prescribed form — an oral agreement or a simple written statement is not sufficient. According to the Obligations Act, a real estate donation contract must be in writing (Art. 482), and when there is no simultaneous transfer of possession of the real estate — which is common in donations — it must be concluded as a notarial act or an authenticated (solemnized) private document. This is not the same as a simple signature verification; solemnization is a special form in which the notary public informs the parties of the legal consequences of the transaction. Without the prescribed form, the contract is null and void.

Ownership, as with buying and selling, is legally secured only by registration in the land registers: the contract creates the basis for transfer, but the donee becomes the registered owner vis-à-vis third parties only through implementation in the land register — more on this in the guide on real estate registration and on ownership certificates and land registers. The tax declaration procedure is simple today: after authentication, the notary public electronically submits the contract to the Tax Administration, which is considered a declaration of transfer (Art. 18–19), and the Tax Administration issues a decision only if an obligation is determined.

Professional advice: Do not postpone registration after concluding the contract. Only through registration does the donee become the secured owner vis-à-vis third parties, so this step is as important as the contract itself, regardless of what the parties thought they had already agreed upon.

Donation and the forced share of heirs

A lifetime donation has a consequence that is easily overlooked: it can affect the rights of other heirs after the donor's death, through the institution of the forced share. The Inheritance Act guarantees certain closest heirs a forced share — a portion of the estate from which they generally cannot be deprived. Forced heirs are descendants, adopted children, and the spouse, to whom half of their legal inheritance share belongs, as well as parents and other ascendants, who are entitled to one-third only if they are permanently unable to work and without means of livelihood.

When calculating the forced share, the value of gifts made by the testator during their lifetime is also added to the value of the estate (Art. 71). If it is determined that the forced share has been violated, forced heirs can demand the return of gifts to the extent necessary to satisfy the forced share, within three years of the testator's death. For someone considering a donation, this means that the decision is worth viewing in a broader inheritance law context: a donation to one child can later affect the rights of others. How this relates to the estate is further explained in our text on probate proceedings and inheritance.

Professional advice: If you donate real estate to one heir and have more, consider in advance the possible impact on the forced share of others and seek legal advice on this. A donation that seems simple today can later become a source of inheritance dispute.

Risks and what to watch out for

In addition to tax, form, and the forced share, donation also carries several risks related to the donor themselves. The first is irrevocability: by donating, ownership is permanently lost, so one should think carefully before transferring. Precisely for this reason, many donors include the retention of certain rights in the contract — most often usufruct or the right of residence — so that they can use the property until the end of their lives even though they have transferred ownership. Such a solution makes the donation safer for the donor, but it must be explicitly regulated in the contract.

The second is the revocation of the donation: the Obligations Act allows revocation in legally prescribed cases, for example due to the impoverishment of the donor or the ingratitude of the donee (Art. 493–496), but not due to the violation of the forced share — there, the rights of forced heirs are protected by the Inheritance Act. The common thread of all these risks is that donation, although gratuitous and family-motivated, should be carried out thoughtfully and with the professional assistance of a notary public and, where necessary, a lawyer.

Professional advice: If you are donating a property in which you still wish to live, consider retaining the right of usufruct or residence in the contract. This way, you transfer ownership but ensure that you can use the property for the rest of your life.

Frequently Asked Questions (FAQ)

Who pays real estate gift tax?
The tax on real estate donation is paid by the donee — the person who receives the property as a gift — because it taxes the acquisition of real estate free of charge. It is a real estate transfer tax, not a separate gift tax. The donor has no tax obligation because they are giving, not acquiring, the property. For closest relatives, however, there is an exemption, so the fact that the donee is the obligor does not always mean they will actually pay the tax.

How much is the real estate gift tax?
The tax on real estate donation is a real estate transfer tax and amounts to 3% of the market value of the real estate, where applicable. The tax base is the market value at the moment the tax liability arises, not a symbolic or contractual value if lower — the Tax Administration can also estimate the value. For more valuable properties, when no exemption exists, the amount can be significant.

Is real estate gift tax paid between parents and children?
Between parents and children, real estate gift tax is generally not paid. The Real Estate Transfer Tax Act exempts spouses, descendants and ascendants in a direct line, as well as adopted children and adoptive parents. It is important to know that this exemption does not cover siblings — donating real estate to a brother or sister is generally taxed. For a specific family relationship, check the status with the Tax Administration.

How is the tax base determined for a donation?
The tax base for a donation is the market value of the donated real estate at the moment the tax liability arises, not the former acquisition price or a lower contractual value. The tax liability, which arises at the moment the contract is concluded, can also be determined by the Tax Administration's own assessment of the market value. Therefore, when a donation is not exempt, the value of the real estate directly determines the amount of tax.

What form must a real estate donation contract have?
A real estate donation contract must be in writing, and when there is no simultaneous transfer of possession of the real estate — which is common — it must be concluded as a notarial act or an authenticated (solemnized) private document. This is not the same as a simple signature verification. Without the prescribed form, the contract is null and void and cannot be registered in the land registers, so confirm the form with a notary public.

Can a donation affect the rights of other heirs?
Yes, a lifetime donation can affect the rights of other heirs through the institution of the forced share. According to the Inheritance Act, the value of gifts is added when calculating the forced share, and if the forced share has been violated, forced heirs can demand the return of gifts within three years of the testator's death. Therefore, when donating to one heir, it is advisable to seek legal advice.