It is natural that everyone loves to receive various gifts, but few know that the current legislation forces them to pay for some of them by introducing a special tax on gifts. That is why, if you are going to make or receive presents, it is better to familiarize yourself in advance with which of them are taxed and which are not.
Tax Gifts
Gifts tax applies to two situations:
- From an organization or private entrepreneur you receive a gift whose value is more than 4000 rubles. Gifts tax will need to be paid depending on the difference between face value a gift made and a fixed amount of 4000 rubles. For example, the value of a gift is 10,000 rubles - in this case, you will need to pay tax only on the amount of 6,000 rubles. If you receive a gift from your employer in the form of an individual entrepreneur or company, then in this case he can withhold tax on the gift from his salary, after which he will transfer it to the organization’s budget as a tax agent, otherwise you will have to deal with these issues fully by yourself.
- You get real estate, stocks, transport, shares or shares from a person who is not a close relative to you. In this case, you need to pay the gift tax on a valuable gift if the gift is not your husband, wife, child, parent, grandmother, grandfather, sibling or at least one common parent.
How to find out?
Many people believe that in fact it is not at all necessary to pay such a fee, since the tax authorities simply do not know that you were given such a gift. In fact, realities say that in the overwhelming majority, authorities nevertheless recognize and force them to pay the gift tax on a valuable gift, and in particular this applies to real estate donated, because to make such a presentation you need to not only draw up a contract in writing, but also register it later in the Unified State Register, and from there the information will go to the tax authorities.
It often happens that the donor and the donee decide to conclude a written deed of gift, which is certified through a notary public, although in fact the law does not provide for such a need. At the same time, not everyone knows that a notary public also obligatorily reports information about the procedure to the appropriate authorities, which then will force you to pay a tax on gifts. In Russia, such information reaches the inspection within five working days in accordance with applicable law.
What will be for non-payment?
Often there are situations when the relevant authorities find out about the concealment of taxable gifts from them, as a result of which the result is far from being the most pleasant for the guilty person, since, in addition to the amount itself, a penalty is also collected, a fine of one fifth of the unpaid amount, as well as fine for not submitting a declaration of income.
However, the inspection will most likely not know that you received shares or shares as a gift, unless you decide to certify the agreement through a notary public again, which is why it is precisely in such situations that the gift tax is not paid in Russia most often. The situation is exactly the same with transport, despite the fact that the authorities involved in its registration must provide tax officials with information that the equipment has been registered, since the form of communication does not include any data about where you are from got it.
Declaration
If the gift you received is taxed, but it was not withheld by the donor (entrepreneur or company), then in this case you will need to submit a declaration to your service no later than April 30 of the year following the year the presentation was received.Gifts themselves are subject to income tax, and these amounts must be paid no later than July 15th.
How to determine the amount?
Calculating the tax amount from the gift received is quite simple - you need to multiply the total value received by the rate of 13%. The greatest difficulties in the process of calculating the tax are caused by determining the exact cost of the received presentation, so it is best to indicate in advance in the drawn up gift contract how much the gift is worth. Income tax and it’s much easier to pay out presents by specifying the exact amounts in the contracts.
Presenting gifts to children
Often there are situations when presents are given to a minor child, and in such a situation, the parents will have to pay the amount. It is worth noting that the tax authorities in the overwhelming majority of cases along with the declaration also offer to provide copies of the following documents:
- passport of the parent who is involved in the submission of the declaration;
- deed of gift;
- birth certificates of children or the child to whom the gift is presented.
It is worth noting that often in their appeals tax authorities once again point out gifts taxed, and possible penalties for not submitting a declaration or non-payment of the specified amount. However, taking into account the opinion of the Supreme Arbitration Court of the Russian Federation, the responsibility in this case lies entirely with the taxpayer (children in this case), despite the fact that they act exclusively through their parents, and they can be fined only if they have reached the age of 16 years. Thus, if your child has not yet reached this age, no one should fine you, but in fact, in the overwhelming majority of cases, the penalty is still imposed, although you can then challenge this decision in court, depending on what tax the gift was issued to you.
Veiled Giving
Some people prefer to conclude not standard gift agreements, but standard sales contracts, but in order to ensure that the seller does not have to pay a certain amount if the property has been owned for less than three years, the “correct” price should be indicated in the agreement, and if you supposedly buying an apartment, its value should be less than a million rubles, while other property should cost less than 250 thousand. But at the same time, trying not to pay gift tax, you must be absolutely sure that in the end the donor (or in this case the seller) will not actually demand the indicated amount from you.
How to register?
If you receive a certain property, then in order to register it with the Unified State Register of Enterprises, you will first need to fully pay the amount of the state fee in the amount of 2,000 rubles for the execution of the gift agreement, as well as the transfer of ownership. In this case, the donee will have to pay 1,500 rubles, while the donor - only 500 rubles, but often in practice all expenses are fully covered by the donee.
Also, a whole package of documents will need to be submitted to the registration authority before paying the tax. A cash gift or any other, it does not play a special role, and often require the following:
- drawn up gift agreement;
- receipts that could confirm your payment of the state fee;
- various title documents for real estate, including a certificate of ownership, as well as a document on the basis of which it was received;
- explication, as well as cadastral passport of the apartment;
- extract from the house book;
- other documents, such as the written consent of close relatives to donate property, as well as copies of passports of all persons participating in the agreement.
It is worth noting that before filing all the above-mentioned papers, it is nevertheless recommended that you additionally check with the authority collecting the gift tax how many percent of its value you will need to pay and which papers should be presented by you.
Do I need to file a declaration?
In accordance with applicable law, individuals who receive other income from which tax agents could not withhold taxes must submit to the tax authority at their place of registration the relevant tax returns. If this is not done, then subsequently a fine of 1000 rubles may be collected from you.
It also raises the quite logical question of how the tax inspectorate can find out about the availability of kinship between the donee and the giver. In this case, this will have to be taken care of by the person who receives the present and must submit a declaration. Despite the fact that confirmation by the tax authority of the right to exemption from taxation of income that was received by donation is not provided, it should not be forgotten that documents that certify the presence of closely related or family relationships can be requested by the tax authorities from a person, received a gift in the process of tax control measures. In other words, in any case, you will need to provide these documents, so it is best to do this in advance.
What is not paid?
There is a list of gifts that are not subject to any duties. A gift is taxed if it is transferred to another person at a cost that is less than the real market price, but the following presents are exempt from such payments:
- Used for training. Any property or money that is used to pay at a university or college is exempt from gift taxes if you pay it directly to an educational institution. In other words, you can pay for the child’s year of study at an educational institution directly, without transferring this amount to him personally, in which case you will not need to think about whether gifts are taxed. But in any case, it does not hurt to consult with a professional accountant or a tax attorney in advance.
- Used to pay for treatment. The same applies to the payment of medical services if this amount is credited directly to the medical institution in which the patient will undergo the necessary course of treatment.
- To political organizations. It is important here to know how to determine if a tax should be paid. In this case, it is better to show a valuable gift to a tax attorney or a qualified accountant.
- To charitable organizations. In this case, too, not all gifts may not be taxed, so it would be better to consult with appropriate specialists.
How can you not pay tax?
Naturally, there are several situations that make it easier to give any gifts in terms of taxing them.
First of all, you can make a gift with your spouse. Given that both of you have a certain limit on the amount of tax payment, you can together make a gift in double volume. For example, you can give your son 4000 rubles, and in the same way, your wife or husband can give him 4000 rubles, which in the end will allow you to give him a present in the form of 8000 rubles without paying any fees.
In the same way that spouses can double the size of a gift when given together, you can double its size if it is given to a married couple. In other words, you individually give a limited amount to each of them, which allows you to significantly increase it.
Use of trusts
Trusts today are used by many as one of the funds that are the easiest for tax exemption. Among the most famous trusts are the following:
- GRAT. A financial institution that is most common in the United States and is often used by people who prefer to give gifts to their loved ones without paying taxes. This organization is based on the fact that it provides the opportunity to use donated funds only after a few years, that is, a person will need to take a kind of wait and see attitude in order to then take away "wait and see property". For several years, a person will receive annually payments from this trust, which will allow to divide the gift into a large number of parts, eliminating the need to pay any fees.
- Personal Residence Trust. This fund is a trust on which a permanent personal residence is registered. In this case, the position of the trust provides for such an option in which the recipient will need to wait a certain amount of time before he can accept this or that real estate. Actually, the scheme here is very similar to the previous case, and the house is evaluated before it is transferred to the ownership of the recipient, and no tax is provided for the assessment definition. For example, if for 5 years the price of the property that was used to create the trust account increased by a certain amount, it will be considered a gift, but you will not have to pay any taxes for it.
- Dynastic Trust. It is also quite similar to GRAT and can reduce or completely eliminate the need to pay any gift taxes. The cost of the presentation is calculated for several generations, taking into account the interests and income of several successful generations without the need to pay gift taxes. Thus, you can create an account for a certain amount, while receiving only 1% of it each year, and then transfer such a trust to your grandchildren, who will already receive the remaining amount.
Market value transfer
The real market value is defined as the price at which the property changes hands from seller to buyer, while no one is forced to buy or sell, and everything is based only on each person's sufficient knowledge of the relevant facts. They include the following:
- how well the item functions;
- what age he is;
- Does he have any damage?
When the property is transferred to another person at the real market price, the gift tax will not have to be paid, since in this case a purchase and sale transaction is being conducted.
It is worth noting that gift recipients can be obliged to pay taxes if, in the end, the price of the gift increases. For example, if you bought shares in the amount of 30,000 rubles this year, but at the same time give them to your close relative for up to ten years, then in that case, if he later decides to sell them for 330,000 rubles, he may be obliged to pay tax on all the capital that has grown, which will be 300,000 rubles.
In any case, it is always better to consult with a professional real estate attorney or a tax attorney in advance and find out if you are formally the recipient of property, a gift, or any other means than cash. A qualified specialist will tell you whether you need to pay some amount and whether it can be reduced.
