Make a gift of real estate in China

I did a post, “how does a foreigner inherit real properties in China?”, some while ago in which I suggest people thinking of making a gift of their properties to their beloved ones as an alternative of passing the properties to their children, spouses or other family members after death. Hence, there have been inquiry emails from foreigners regarding how they can make a gift of real property to their family members. Here is the summary how a property gift can be done in China between family members.

In essence, a gift of real estate is to transfer the title of the properties, either residential or commercial, from the donor/grantor to the donee/grantee. As always, this is a matter related to real estate, so the Chinese laws will be the applicable law governing the process.

To effectuate a gift of property, there shall be a contract or agreement intending a change of ownership between the donor/grantor and the done/grantee. Then the parties shall together apply to local real estate registry authority to effect the title transfer which will then result in the issue of a new property ownership certificate bearing the done/grantee as the owner the property.

In practice, there are two ways of demonstrate the contract between the parties. Firstly, the parties sign one written contract for gift of real estate. Alternatively, where the parties cannot come together to sign the contract, the donor/grantor can first issue a written statement of gift on his or her own in which he or she expresses a clear intent of conveying the property to the donee/grantee, and the donee/grantee will then sign a statement of acceptance of the gift referred to in the donor/grantor’s statement of gift.

For purpose of effecting title transfer at real estate registry authority, the written contract or statements shall be notarized/legalized. The notarization or legalization shall have to be conducted in China where the real estate is located according to China Notarization Law. In the case of the parties signing one written contract of gift, both donor/grantor and donee/grantee shall come to China to appear in person before notary officer. In the case of separate statement approach, however, the donor/grantor may notarize his statement of gift at their home country and then get the same authenticated by Chinese consulate there before presenting it for title transfer. On the other hand, the donee/grantee shall have to have his statement of acceptance notarized in the local notary office where the real estate is located. Notarization costs. The fee charged for such notarization of real estate gift transaction is 2% of the value of the property being gifted. In practice, such value will be determined through property appraisal. Our experience shows that some notary office in order to secure business is willing to accept value that is intentionally appraised at low level.

After notarization is duly completed, the parties shall go or shall get their agents to go to local real estate registry authority to apply for title transfer. Right before this, the parties shall need to pay the deed tax of 3% of the property value to government. It shall be noted that if the gift is not made between family members, in addition to the deed tax, the donee/grantee shall also pay an income tax of 20% of the property value to government, which is intended to clamp down fake gifting which is actually a sale transaction. Upon issue of the new real estate ownership certificate bearing the donee/grantee as the property owner, the gift of real estate is fully done.
For more information regarding the topic, please contact the author at emails: jasontian78@gmail.com, or jie.tian@dachenglaw.com or give him a call at: +8613816548421, or +8621-20283433

Jason Tian

Jason Tian, senior partner, specializes in foreign-related legal services ranging from foreign investment in China, banking and capital, real estate, M&A, corporate, international trade, estate planning, inheritance and divorce at his blog: https://www.sinoblawg.com.

8 Comments

  1. cindy truong   •  

    Hi Jason,
    My father have a property in China and he passed away a few years ago. I am his only child, how do I go about to transferring the house under my name? I don’t even know where to begin or where to look. He did not leave a will behind.
    -cindy

    • Jason Tian   •     Author

      hi Cindy, this can be a tricky situation if you are the only heir. is your mom alive? Pls send email to my email account for further communication. Also pls tell me where the property is situated.

  2. Eva   •  

    Hi Jason,

    I have an apartment in China my father transferred to me before he passed away. If I now would like to transfer the property to a relative, how does one determine the property value? Does it have to be the market price or can it be the price it was bought or even a much lower price? After all it is a gift and I’m not technically selling it.

    Many thanks in advance!

    • Jason Tian   •     Author

      It doesn’t matter whether it is sale or gift. The tax base is the same. In practice, local tax authority may apply a tax base in light of the current market level. It is generally a discounted market value.

  3. Phil   •  

    Hi Jason,

    Is there any restriction to gifts between family members? I am thinking about the case where a donor has 2 heirs (of the same rank)? Can he donate the house in full to one of them and exclude the other one altogether?

    Thanks

    Phil

    • Jason Tian   •     Author

      Yes, Phil, the donor can gift his or her property to anyone he or she wishes. There is no restriction on this. This is why I recommend people to dispose of their properties before they pass away.

  4. Robert   •  

    Hi Jason,

    Does the donee of the gift (assuming they are a foreigner) need to satisfy any employment / residency requirements before the title can be transferred? E.g. is the donee required to show proof of employment in China for at least one year?

    Many thanks!

    Cheers,
    Robert

    • Jason Tian   •     Author

      Hi Robert, assuming you are talking about gift between family members, there is no such requirement in order to carry out the gift. In the case of non-family members, such gift is burdened with heavy taxes as you have noticed in my post. Strictly speaking, a gift between non-family members shall not be subject to one-year residency requirement as such requirement is imposed on sale and purchase transactions. As always, for such practical questions, it is better to enquire local real estate transaction centre about your questions.

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