You may be thinking…

“A donation within the family can’t possibly be taxed, right?”
You’re partly correct – but only when it comes to close relatives. For other donations, the law may treat them as taxable income.

Clients often ask me

• Is there still a gift tax today?

• When do I have to include a donation in my tax return?

• What is the difference between donating within the family and outside the family?

• Do tax rules also apply to donating real estate?

Basic tax rules for donations

1. Gift tax has been abolished

   • Since 2014, donations are covered by the Income Tax Act.

2. Close relatives

   • Donations between parents, children, grandparents, siblings, and spouses are tax-exempt.

3. Donations outside the family

   • If you receive a donation from someone who is not a close relative, it may count as income subject to income tax.

4. Real estate

   • The same rules apply: donating real estate to a child is tax-free; donating to a non-relative may trigger tax obligations.

Step-by-step process

1. Determine whether the donor is a close relative.

2. Check whether the donation qualifies for an exemption.

3. If not, include the donation in your tax return.

4. For real estate, don’t forget Land Registry registration and related fees.

5. For larger or foreign donations, seek advice from a tax advisor or lawyer.

Real-life examples

• A father donated an apartment to his daughter – no tax applied.

• A businessman donated a car to a friend – it had to be taxed as income.

• A client received a monetary gift from an aunt in the USA. She didn’t realize it was taxable income and faced a tax reassessment.

The most common mistakes

• Assuming donations are always tax-free.

• Failing to include a taxable donation in a tax return.

• Not knowing the differences between family and non-family donations.

Lawyer’s recommendation (checklist)

☑ verify the relationship between donor and donee
☑ check whether the donation is exempt
☑ include non-family donations in your tax return
☑ account for Land Registry fees with donated real estate
☑ consult a professional for large or foreign donations

FAQ

Is there still a gift tax today?
No, it has been abolished. But donations may still be taxed as income.

Do I have to report a donation from a close relative in my tax return?
No, donations from close relatives are exempt.

Is money given between friends taxable?
Yes, unless the amount is negligible – donations between friends usually count as taxable income.