In addition to contracts for the sale of real estate, our office naturally deals with another basic type of contract, the contract of gift. A gift contract gives the donor the opportunity to make a gift of a higher value free of charge to the donee out of his own assets. The object of the aforementioned gift may be immovable property, movable property the value of which exceeds HUF 150,000, or a right of pecuniary value. In the case of such a gift of a higher than normal value, both the donor and the donee should conclude a gift contract to ensure that the gift is made in accordance with the donor’s intentions and to create a clear legal situation for both parties.
In addition to the recipient’s acceptance of the gift, the value of the gift must also be stated in the contract. In order to settle any disputes that may arise later, the gift contract may also state the donor’s expectations of the donee and the recipient’s expectations of receiving a larger than normal gift. In the light of the above, it is of course easier, with the help of a competent lawyer, to resolve the unpleasant legal situation where the donor is unable to fulfil the terms of the contract or would like to reclaim the gift.
As in the case of contracts for the sale of real estate, the contract must be in writing, the change of ownership can only be recorded in the real estate register and the contract is only valid if the deed of gift has been drafted and countersigned by a lawyer.
It is good to be aware, however, that although a gift is a free benefit, in many cases it is not free. The general rate of gift tax is 18%, unless otherwise provided for in the tax law, while the rate of gift tax on gifts of residential property and rights of pecuniary value connected with residential property is 9%. Of course, there are exceptions where the donor does not have to pay the gift tax, such as gifts between direct relatives, which are free of charge.
In our experience, a gift contract seems to be a simple contract, but there are pitfalls, which are most likely to become apparent in the future. If these are clarified in advance, it can save a lot of money and headaches.
It is important that you consult a professional who can actually assess the circumstances of the case and provide you with accurate information before entering into such contracts.
He writes gift contracts for the office on a weekly basis. Contact us with confidence!
This document should not be considered as a statement by a lawyer or as legal advice. Each case is different and should be considered on its own merits. Furthermore, you should be aware of any changes in the law that may have occurred since the writing of this article. The purpose of these articles is to make people aware of legal requirements and to provide some information on the subject. For specific questions, please contact us personally.
