Everything you need to know about real estate gift deeds
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Everything you need to know about real estate gift deeds
Table of Contents
- What is a gift letter?
- Legal requirements for gift deed of real estate
- Tax and financial aspects
- Practical aspects when gifting property
- The contents of the gift certificate
- Form requirements and validity
- Protection of the gift
- Registration and storage
- Case law and legal cases
- Conclusion
What is a gift letter?
A gift deed is a written document that specifies that a gift has been given and the terms of this transfer. For real estate, the deed of gift must contain specific details to be valid. These requirements include a clear description of the property, the names of the parties, signatures and any conditions attached to the gift.
Legal requirements for gift deed of real estate
For a deed of gift relating to real estate to be valid, it must meet the following formal requirements:
- Writing: The gift deed must be in writing.
- Declaration of transfer: It must be clearly stated that the property is transferred as a gift.
- Specification of share: The deed of gift must state how much of the property is transferred.
- Signatures: Both donor and recipient must sign the gift deed.
- Witnessing: In order for title deeds to be granted, the donor's signature must be witnessed by two people.
Tax and financial aspects
When transferring a property as a gift, the recipient takes over the donor's tax situation according to the continuity principle. This means that if the recipient sells the property in the future, the capital gains tax is based on the original acquisition cost that the donor had.
Gift tax has been abolished in Sweden, which means that no tax needs to be paid for gifts received. However, any payments made in connection with the gift must be less than the property's assessed value for the transfer to still count as a gift instead of a purchase.
Practical aspects when gifting real estate
After the deed of gift has been drawn up and signed, this must be submitted to the Land Survey along with an application for deed. The recipient must apply for deed within three months of signing the gift deed to register the change of ownership.
The contents of the gift certificate
A valid gift deed for real estate must contain the following information:
- Donor and recipient: Name and personal details for both donor and recipient.
- Description of the property: Property designation and possibly other identifying details.
- Share of the property: How much of the property is being given away (e.g. 50% or the entire property).
- Signatures and witnessing: Signatures of both donor and recipient and witnessing by two people for the donor's signature.
Form requirements and validity
In addition to the formal requirements mentioned above, there are additional rules that can affect the validity of a gift deed:
- Gift intention: The donor must have a clear intention to give away the property.
- Voluntariness: The gift must be given voluntarily without coercion.
- No consideration: The gift must be given without any requirement for consideration, although a symbolic compensation may occur as long as it is insignificant in comparison to the value of the property.
Protection of the gift
The gift giver can set conditions in the gift deed to protect the gift from, for example, being seized by the bailiff. This may include conditions that the gift may not be sold, exchanged or given away by the recipient.
Registration and storage
There is no requirement to register the gift deed itself, but it must be used to prove the transfer when applying for deed. It is important to keep the gift certificate in a safe place, such as a fireproof safe deposit box, as it is a legal document.
Case law and legal cases
Several court cases in Sweden have dealt with issues surrounding gift deed and its validity. A common theme in these cases is the importance of meeting all formal requirements to avoid the gift being declared invalid. A famous case is NJA 1981 p. 791, where the Supreme Court held that a deed of gift which did not meet the formal requirements for transfers of real estate was void.
Conclusion
Giving away a property by gift is a process that requires careful documentation and compliance with specific formal requirements in order to be legally binding. A well-designed gift letter protects both donor and recipient and ensures that the transfer takes place in accordance with the requirements of the law. It is therefore often wise to use a professionally produced document template to ensure that all form requirements and conditions are correctly met.
