Thinking of gifting a property? Know the legal route

property gift deed
Real Estate » Thinking of gifting a property? Know the legal route

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People choose to gift homes because they make meaningful gifts. However, gifting property is not a simple process- it is riddled with several legalities that purchasing parties should be aware of. In India, the property can be transferred through a multitude of legal routes.In some cases, taking legal advice is also important. However, if you’re planning to gift property, you should do so via a property gift deed. This article will emphasize gift deed rules to help you transfer property safely.

What is a Gift?

In legal terms, A gift is the voluntary transfer of moveable or immovable property by a donor to a donee. Gifting involves no ulterior motives and is exchanged willingly between both parties. Section 122 of the transfer of properties act, 1882, states that a gift can be transferred through a gift deed, which is quite similar to a sale deed. As per experts at Law Rato, a gift deed contains all essential details related to the property, the gift giver or donor and the recipient or donee. One cannot use this legal document to evade tax or as a cover for illegal activities. Qualified property lawyers from Chandigarh can help draft gift deeds for smooth property transfer between the donor and donee.

What Counts as a Valid Gift Deed?

Advocates from top law firms in Chandigarh can help parties purchase registered gift deeds with the sub-magistrate of their area. A gift deed is registered under Indian property gift deed rules and corresponding laws, such as Section 17 of the Registration Act, 1908, and Section 122 of the Transfer of Property Act. A gift not registered under these sections is invalid and cannot be transferred. Moreover, a gift deed property can be sold further by the recipient.

So what makes a gift deed valid in a court of law? A valid gift deed needs signatures from two registered witnesses and is stamped with an appropriate non-judicial stamp depending on the nature and value of the gifted property. Moreover, both the donor and recipient need to be present at the registrar’s office at the time of transfer.  

As per Law Rato, the property you’re planning to gift will only be considered valid if:

  1. It is a real, tangible property that already exists. One cannot gift future properties legally
  2. Both parties, i.e., the donor and donee, are alive at the time of exchange
  3. The property is a transferable one

In short, the property you’re planning to gift needs to be backed by a registered gift deed stamped appropriately and is legally accepted by the donor and donee in the presence of at least two eyewitnesses. Next, the donor must pay stamp duty on gifted property. As per experts at Law Rato, this stamp duty varies from state to state. As compared to men, women are required to pay lesser stamp duty. One can find stamp duty rates on registered government websites. However, you can take the help of a qualified lawyer to make sense of the latest stamp duty rates across India. 

How to Transfer Property to Minors in India?

Unfortunately, minors cannot become legal recipients of property. A gift deed is null and void if the donee is less than 18, as minors cannot be part of legally binding contracts. However, the property may be gifted to the child’s legal guardian. Legal guardians include the child’s father, father’s executor, paternal grandfather or paternal grandfather’s executor. The donee can accept or return the gift after coming of age. The same rules apply to recipients with unstable mental health. 

Also Read: What is the Power of Attroney and its types?

How to Transfer Property from Father to Son in India?

If you’re wondering how to transfer property from father to son after death, we are here to clear your doubts. A father can transfer property to his son through a stamped and legally registered gift deed or a will that bequeaths the property to his son. However, the procedure to transfer property from father to son is more complex than it seems. To elaborate further, sons can legally stake claim to their father’s property only if they are in possession of 

  • a registered gift deed 
  • Succession Certificate
  • No Objection Certificate from siblings/potential heirs
  • Lineage List Certificate
  • Sale Deed
  • Relinquishment Deed
  • Will or testament

In the absence of an authentic will, sons may obtain a gift, settlement or relinquishment deed from other heirs and produce it to an SRO for property transfer. They can also execute a sale deed to buy other heirs from their father’s property. All necessary legal documents must be thoroughly verified and presented to make this claim. Moreover, in what may come as good news to sons, any gift exchanged between blood relatives or members of a Hindu Undivided Family (HUF) is exempt from income tax, as per the income tax act of 1961. 

How to Transfer Property from Husband to Wife in India?

The transfer of property from Husband to Wife in India is a relatively simple one – Partners can transfer property via a registered gift deed. As per Section 122 of the Transfer of Property Act, this action is necessary if husbands want to transfer a property in their wife’s name. A partition deed may also be used to divide a jointly owned property equally. If a couple receives property as a gift on the occasion of their marriage, it will be exempt from taxation. If not, it will be taxed under relevant sections of the Indian Gift Tax Act.

Also Read: How to keep Family Property Conflicts at Bay the Legal Way

Conclusion

If you want to gift a property to a loved one, a legally registered and stamped gift deed is imperative Or you can take legal advice from Lex Solutions, one of the most trusted law firms in Chandigarh. Only gifts received on the occasion of marriage, received by way of a will or through a trust, transferred between blood relatives or among members of HUF are exempt from relevant sections of the Income Tax Act, 1961. A gift deed, once signed, can not be revoked except when the donee dies without family. However, this provision is only applicable if explicitly mentioned in the gift deed and signed by and in the presence of two relevant witnesses.