- *"**How to transfer your property**"*
*Here's a checklist that you should be take care of*
- Sourcs The Economic Times
*When it comes to transferring property, a sales deed may not always fit
the bill, especially if you want to pass it on to relatives. In such cases,
instruments like a gift deed or relinquishment deed can come to your
rescue. However, blindly choosing either can lead to problems.*
*"You must understand the purpose of each document before getting it
drafted. Know the benefits as well as drawbacks of each," says Vaibhav
Sankla, director, H&R Block. "These documents are designed to play a
specific role in the transfer of property and, hence, it is important to
consult a lawyer," he adds.*
*Gift deed*
*This document allows you to gift your assets or transfer ownership without
any exchange of money. To gift immovable property, you just have to draft
the document on a stamp paper, have it attested by two witnesses and
register it. Registering a gift deed with the sub-registrar of assurances
is mandatory as per Section 17 of the Registration Act, 1908, failing which
the transfer will be invalid. Besides, such a transfer is irrevocable. Once
the property is gifted, it belongs to the beneficiary and you cannot
reverse the transfer or even ask for monetary compensation.*
*However, if you want to gift movable property like jewellery, registration
is not compulsory. At the same time, a mere entry in an account book is not
sufficient to establish a transfer. Apart from physically handing over the
property, you need to back it with a gift deed. The process is slightly
different if you are gifting company shares. You will have to fill out the
share transfer form and submit it to the company or registrar, and the
transfer agent of the firm. Once again, get a gift deed drawn and executed
to complete the transfer, but the document need not be registered.*
*Advantages: The biggest benefit is that there is no tax implication if you
are gifting property to certain relatives (see box). However, you still
have to pay stamp duty, which can vary from 1-8% for immovable property,
depending on the state in which the transfer takes place. If you are
gifting property to a non-relative, the stamp duty would be higher at
5-11%. You have to pay this duty even in the case of movable property.
Expect to shell out 2-8% in case of relatives, and 3-8% for non-relatives.
For physical shares, the stamp duty is 0.25%, but if these are in the demat
form, you don't have to pay.*
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*Limitations: Though a gift deed cannot be revoked, it can be challenged in
court, coe rcion and fraud being the most common grou nds. So, if you have
been tricked into gifting property, you can take the matter to court and
have the transfer reversed. It can also be challenged on the grounds that
the donor was not of sound mind or a minor. "You can never have a
challenge-free gift deed, but consult a lawyer while drafting it so that
the chances of it being challenged are minimum," says Aakanksha Joshi,
senior associate, Economic Laws Practice. Also, you cannot gift a property
that's held jointly.*
*Relinquishment deed:*
*This document is quite different from a gift deed, though the legal
implications are the same. You can use this instrument if you want to
transfer your rights in a particular property to another co-owner. Such a
transfer is also irrevocable even if it is without any exchange of money.
As with all documents related to the transfer of immovable property, a
relinquishment deed needs to be signed by both parties and registered.*
*The stamp duty is similar to that for a gift deed. However there is no
discount for relatives, nor are there any tax benefits. Also, both stamp
duty and tax will be applicable only on the portion of the property that
you relinquish, not on its total value. You can also use this deed to
transfer movable property without registration, but it is typically used
for immovable property.*
*Advantages: It allows seamless transfer of your share in a jointly-held
property. "This document is most commonly used when a person dies without
leaving behind a will and all siblings end up inheriting the property,"
explains Joshi. Unlike a gift deed, you can draw the
relinquishment deed for monetary consideration.*
*Limitations: There are no tax benefits, for as per the tax laws, the term
'transfer' includes relinquishment, not gift. Hence, when you are
relinquishing property for monetary consideration, it will result in
capital gains for the transferor. "If the consideration is less than the
stamp duty value of the property, the difference between the stamp duty and
the consideration will be taxed in the hands of the buyer," says Sankla. If
you relinquish it without any consideration, the stamp duty value of the
property will be its sales price.*
*Source : Economic Times *
