A poor estimate of the price of real estate in the context of a donation, by mistake or omission, can be very expensive explanations and overview of the means that exist to make a good estimate.
How to assess the price of a property before a donation?
The law does not impose any precise benchmark for estimating the price of real estate before a donation. Thus, as the owner of the home, you are free to estimate its value and enter it in the deed of transfer of ownership. The value you indicate will be used as the basis for the calculation of the amount of donation rights by the tax authorities. To note the tax administration has a right to review the property valuation retained: it can challenge it and revise it upwards to adjust the gift tax.
What is the market value?
The market value has no legal definition, but it is accepted as the market value, that is to say the price that the person who receives the property could obtain if he sold the property under normal conditions. It is this value, on the day of the donation that you must retain in the deed of transfer of property. In the absence of a specific law or rule, the tax administration recognizes the market value as a basis of valuation to estimate the fair price of a property before a donation. Please note, the market value should not be confused with the convenience value, which results from an agreement between two people without necessarily reflecting the reality of the market.
Estimate a property at its market value
No valuation method is imposed to estimate the price of your property before a donation. You can do it yourself or go through a professional. You can first look at the selling prices of real estate equivalent to yours in your locality by looking at the real estate advertisements. Realtors in Tucson AZ You will thus have an idea of the price, knowing that the real estate agencies advise to sell at the market price.
What are the tools to estimate the price of housing?
Should we use a real estate professional?
Yes, to assess your property at its fair value and obtain an official document that can be used as proof for the tax authorities. In addition, the professional will know how to apply any discounts or premiums (for example in the event of a shared gift) to obtain the fair market value. The notary is particularly well placed to assess real estate, insofar as the establishment of a notarial deed is mandatory to make a donation. The latter will be responsible for presenting the deed of donation to the land registration service to calculate the taxes payable, in addition to the donation rights.
Is your property undervalued during the donation?
If the tax administration realizes that the value mentioned in the deed of transfer of ownership is lower than the market value of the accommodation, you risk a tax adjustment. The latter can intervene until the end of the third year following the payment of the questioned gift rights (in certain cases, the period can be extended up to 10 years). It’s good to know to recognize an undervaluation; the tax authorities must provide proof, for example if the done sells the property two years later with a significant difference between the sale price and the gift value.