The donation of a property is subject to a favorable tax regime, but there are “limiting” effects
In practice, the donation of the property is used above all between parents and children or other descendants in a direct line because the donation is subject to a preferential tax regime.
However, it would be advisable to know the “limiting” effects of the donation, for example in the event of a future sale of the property. We talked about it with the lawyer Nicola Ferraro, founder partner of de Tilla Studio Legale.
Attorney Ferraro, let’s start first of all from the reason why the deed of donation is used more frequently, ie the preferential tax regime. Can you explain it to us?
The deed of donation is subject to the payment of the donation tax and the mortgage and cadastral taxes. The donation tax is not due if the value of the asset (which, mind you, is different from the commercial one) is less than or equal to the deductible:
Of Euros 1 million, in the case of donation between spouses, parties to a civil union, parents and children, ascendants and descendants; Of Euro 100 thousand, in the case of donation between brothers and sisters; Of Euros 1.5 millionin the case of a donation for the benefit of a disabled person.
Once these values are exceeded, the donation tax is due. It is equal to:
2% in the case of donation between spouses, parties to a civil union, parents/children, ascendants and descendants; 4% in the case of donation between brothers and sisters and other relatives.
If the donation takes place between subjects other than spouses, parties to a civil union, parents and children, ascendants and descendants, brothers and sisters and other relatives, the rate is 8% (for example between subjects in relation to whom there is no no family relationship). Mortgage tax is 2%, land registry tax is 1%. If, however, the asset to be donated is a “first home”, the mortgage and cadastral taxes are fixed in the amount, each, of Euro 200.00.
Why, in view of these tax benefits, should attention be paid to the use of donations as a means of transferring ownership of a property?
The donation, unlike the sale, does not involve a definitive purchase of the property. Since it is an act of generosity, the legislator considers the donation as a temporary transfer that can be called into question by the donor (both in life and in the context of succession), or by the same heirs who consider themselves damaged because they believe that the share of the inheritance that is due to them by law (so-called legitimate).
What are the initiatives that can be taken by the donor?
The donation can be canceled due to ingratitude of the donee and due to the occurrence of children. A prerequisite for revocation due to ingratitude is that the donee has been guilty of serious injury to the donor or has caused damage to his assets or has refused him payment of the maintenance due pursuant to articles 433 and 436 of the civil code
The insult consists in an action which clearly manifests a feeling of disesteem for the moral qualities of the donor in contrast with the sense of gratitude which, according to common experience, should characterize his behaviour.
A peculiarity. Adultery is not in itself a cause for revocation of the donation. However, the ways in which it is committed can justify it. This is the case, for example, in the case of an extramarital affair entertained by the husband with the donor’s brother’s wife and the circumstance that it developed within the family business.
The revocation of the donation due to the occurrence of children responds to the need to allow the donor to reconsider the act of generosity made following the birth or knowledge of a child.
It should be specified that, for the purposes of the legitimacy of the revocation, it is the absence of descendants at the time of the donation and not that the donor, although aware of the existence of a child, is nevertheless determined to donate.
What, on the other hand, are the critical issues from a hereditary point of view?
The most frequent case is that of heirs who consider the legitimate share of the inheritance (ie the one due by law) to have been damaged. For reasons of family solidarity and natural duty, the civil code provides that certain subjects (spouse and children or, in the absence of the latter, parents of the deceased) are reserved a share of the inheritance independently or even against the will of the testator.
The law gives them the right, once the donor is deceased, to restore the injured party’s share to life with the donation.
What initiative can the heir take in the event that the share of the inheritance due to him by law has been violated with the donation?
The heir who considers himself injured has the right to bring a legal action aimed at declaring the ineffectiveness, total or partial, of the donation to the extent strictly necessary to reintegrate the reserved share.
The reduction action can be exercised up to 10 years from the opening date of the succession; The duty of the heir is to indicate exactly the value of the hereditary mass and the legitimate share violated.
What if in the meantime the donated property has been sold to third parties?
The legitimized must, first of all, act against the donee by introducing the reduction action; and in the event of a successful outcome and non-recovery (partial or total) by the donee of the share, take action against the third party who, in the meantime, has purchased the asset.
This action is called return action. The reduction action is prescribed within the term of twenty years from the date of transcription of the donation. After this term, the legitimate party (victorious against the donee) loses the right to take action against the third buyer (to whom, in the meantime, the asset has been sold).
The return reduction action and the reduction action are distinct from each other. They address different subjects and that of reduction presupposes the victorious outcome of the first. Furthermore, unlike the reduction action, the restitution action is a real action since its acceptance translates into the automatic transfer of ownership of the asset in favor of the legitimized one.
Of course, the third-party buyer can avoid returning the property to the heir if he pays him an amount corresponding to its value at the time the request is accepted.
In conclusion, what are the disadvantages of the donation on the circulation of a property?
The deed of gift can always be revoked by the donor (both in life and in succession). However, this can happen in the case of ingratitude (of the donee) or due to the occurrence of children (of the donor). Furthermore, even for a long period of time after the donor’s death, the deed of donation is subject to the actions that can be brought by legitimate heirs who consider themselves damaged by the act of generosity performed.
Therefore, the effects of the purchase of an asset made through the donation cannot be considered defined until 10 years have elapsed from the date of death of the donor and provided that, in the meantime, the reduction action has not been introduced.
Anyone who buys a property donated to the seller is also subject to the uncertainty of the purchase as the action for restitution can be brought against him within the term of 20 years from the date of transcription of the donation.
Avvocato Ferraro, are there any forms of caution that can be adopted to reduce the risk?
Surely. First, the reduction action can be waived. Therefore, the donee and the donor’s heir can agree for the latter to renounce the reduction action. However, it should be specified that the renunciation is possible only after the donor has died; first has no effect.
Subsequent renunciation can also take place for conclusive facts. The action for restitution can also be waived. It can be renounced immediately, since the death of the donor is not required.
Another tool that is used in practice is the insurance policy. With it, the risks of losing the reduction and repayment action are reversed on a qualified operator (usually a bank). The policy can be signed by the donee or by the third party purchaser who is also responsible for paying the corresponding insurance premiums.
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