You may be wondering…

• Do you have to pay tax when gifting real estate?

• How is it different from a purchase?

• Do you always have to file a tax return?

• Can the authorities ask about the source of funds?

Clients ask me…

Is tax payable on real estate gifts?
Yes and no. The gift tax was abolished, but gifts are treated under income tax. If the gift is within the family (direct line, siblings, spouses, or household members), it is exempt. If it’s from another person and exceeds CZK 15,000, it is taxable.

How is it different from a purchase?
In the past, real estate purchases were subject to a property transfer tax – abolished in 2020. Today, the buyer only deals with income tax for the seller. In gifting, it’s the donee’s income tax liability that matters.

Do you always have to file a tax return?
Not if the gift comes from close family. For gifts from others worth more than CZK 15,000, yes.

Gifting real estate in a nutshell

• Agreement – must always be in writing, with notarized signatures.

• Land registry – application for registration of ownership rights.

• Tax – exempt for family, taxable for non-relatives over CZK 15,000.

• Documentation – the tax office may request proof of the donor’s source of funds.

Main risks and mistakes

1. No written agreement. Written form is mandatory for real estate.

2. Ignoring tax implications. Many mistakenly believe that “there’s no tax anymore.”

3. Not reporting gifts from non-relatives. The tax office sees transfers in the land register.

4. Unclear source of funds. If the donor bought the property shortly before gifting it, the origin of funds may be questioned.

Step-by-step process

1. Draft a gift agreement – with a precise description of the property.

2. Have signatures notarized and prepare the application for the land registry.

3. Consider tax implications – exempt within family, taxable for others.

4. Keep supporting documents – bank transfers, contracts, confirmations.

Real-life example

A mother gifted her son a family house worth CZK 5 million. Because this was a gift within the direct line, it was fully tax exempt. Everything was done through a proper gift agreement and registered in the land registry. Another client, however, received a holiday cottage from a family friend – he had to file a tax return and pay income tax.

Why to be cautious

Real estate transfers are “visible” to the tax office. Without a proper gift agreement and correctly addressed tax issues, you risk not only penalties but also invalidity of the transfer.

Lawyer’s recommendation

• Never skip the written form – it is mandatory for real estate.

• Always verify whether you fall into an exempt category.

• Assume the tax office will see your transfer in the land registry.

Checklist:
☑ Written agreement with notarized signatures
☑ Application for land registry filed
☑ Verified tax exemption status
☑ Supporting documents stored

FAQ

Do you pay tax when gifting real estate within the family?
No – transfers between parents, children, siblings, or spouses are exempt.

Do you always have to file a tax return?
No, only if it’s a gift from a “non-relative” worth more than CZK 15,000.

What if I get a gift from a friend?
If the value exceeds CZK 15,000, you must declare it in your tax return.