Transferring property within a family is a common practice in India. A gift deed is one of the most preferred ways, wherein the owner (donor) transfers property to a family member (donee) without any consideration or monetary exchange. Thus, while transferring ownership, this method minimises the legal hassle. Let us look into how this process works, the prerequisites in law, and the advantages of executing a gift deed for property transfer.

What is a Gift Deed?

A gift deed is a legal document that allows property ownership to be transferred between individuals without requiring monetary exchange. A transfer is only deemed legitimate if it is made willingly, free from compulsion, and accepted by the receiver while the donor is still alive. It is legally binding after registration and acts as proof of transfer.

Steps to Transfer Property via Gift Deed

Transferring property through a gift deed involves a series of steps that must be followed to ensure the legality of the process. Here are the five steps to follow:

1. Drafting the Gift Deed

   The first step is to draft the gift deed, which must include:

   • The full name, age, residence, and relationship of the donee and donor.
   • Description of the property being gifted (size, location, and ownership details).
   • Declaration that there will be no payment and that the move is entirely voluntary.
   • Statement confirming that the donee accepts the gift.
   • Signatures of the donor and donee in the presence of two witnesses.

2. The Donee’s Acceptance
   

   The donee must accept the gift while the donor is still alive for the gift deed to be deemed legitimate.

3. Stamp Duty Payment
   

   Stamp duty, which varies from state to state, is a substantial part of property transfers. The quantity depends on the relationship between the giver and the donee. Transfers to family members typically incur less stamp duty than transfers to non-related individuals. Here are a few instances:

   • Delhi: 5% for joint ownership, 6% for male receivers, and 4% for female recipients.
   • Karnataka: 3% for properties under Rs. 45 lakhs, 2% for those between Rs. 45 and Rs. 90 lakhs, and 5% for that amount.
   • Uttar Pradesh: Rs. 5,000 for family transfers and 7% for others.

4. Registration of the Gift Deed
   

   The gift deed must be registered with the sub-registrar to ensure that the transfer is legitimate. During the registration process, the parties involved, i.e. the donee and the donor, with two witnesses, must be present. The transfer becomes enforceable as soon as the sub-registrar records the transaction and checks the papers.

5. Mutation of Property Records
   

   Upon recordation of the gift deed, it is the duty of the donee to apply for property mutation for updating the municipal records. This allows the new owner to pay property taxes in their name formally and ensures the transfer of title in government records.

Documents Required for Gift Deed

Submission of specific documentation is necessary for the registration process. Among these are:

• Deed of gift (properly signed by witnesses and both parties)
• Verification of identity (donor and donee passports, PAN cards, or Aadhaar cards)
• Verification of property ownership (sale or title deeds, or any supporting documentation)
• The encumbrance certificate is used to make sure there are no legal issues with the property.
• NOC (No-Objection Certificate), if any
• Receipts for recent property taxes

Tax Implications of Property Transfer via Gift Deed

Taxes have a significant influence on real estate transactions, so understanding their effects is essential. Section 56(2) of the Income Tax Act of 1961 exempts property received as a gift from certain relatives (parents, children, siblings, etc.) from taxation. If the property is a gift from a non-relative, the recipient may be obliged to pay taxes on its market value.

Benefits of Using a Gift Deed for Family Property Transfers

When it comes to transferring property inside a family, a gift deed has various benefits. Among the main advantages are:

• No Monetary Exchange: Guarantees a seamless transfer devoid of monetary exchanges.
• Reduced Stamp Duty: When transferring property inside the family, gift deeds carry a lower stamp duty than a sale deed.
• Immediate Ownership Transfer: A gift deed guarantees immediate ownership, as contrast to inheritance, which transfers property after the person passes away.
• Prevents Legal Conflicts: Family conflicts are reduced because the transfer is registered and documented.

Other Methods of Property Transfer Within a Family

While a gift deed is a popular method, there are alternative ways to transfer property within a family. These include:

• Will or Inheritance: Property is transferred upon the owner’s death as per the will or intestate succession laws.
• Partition Deed: Used when joint owners want to divide property among themselves.
• Relinquishment Deed: When one legal heir wishes to give up their share in favour of another heir.
• Sale Deed: Property can be transferred by executing a sale deed, even among family members, though it involves monetary consideration.

Role of a Property Lawyer in Gift Deed Transactions

A property lawyer plays a crucial role in ensuring that a gift deed transaction is legally sound and hassle-free. They help in:

• Drafting a Legally Valid Gift Deed: A lawyer ensures that the document complies with legal requirements and contains all necessary details.
• Verifying Ownership and Encumbrances: They check property records to confirm the donor’s ownership and ensure there are no legal disputes or encumbrances.
• Advising on Stamp Duty and Tax Implications: A lawyer helps determine the applicable stamp duty and advises on tax liabilities.
• Facilitating the Registration Process: They guide both parties through the registration process at the sub-registrar’s office.
• Handling Disputes or Legal Issues: If any disputes arise, a lawyer provides legal solutions to resolve them efficiently.

How Zolvit Can Help

Zolvit streamlines the sometimes complicated legal procedures associated with property transfers. To ensure a smooth transfer, our staff offers professional help with the drafting, evaluating, and registration of gift deeds. Using Zolvit, you receive:

• Legal Advice: Making sure that state rules and regulations are followed.
• Document Preparation: Creating precise and legally sound gift deeds.
• Support for Registration: Helping to register the deed at the sub-registrar’s office.
• Tax Consultation: Assisting you in comprehending how property transfers affect your taxes.

You can easily transfer property within your family while making sure all legal procedures are fulfilled by selecting Zolvit.

Conclusion

Transferring property by way of a gift deed is the simplest and the most tax-efficient and legally correct way to transfer property in a family from one person to another. This way, ownership gets transferred free from hassles and safeguards both parties. Yet, it is always good to consult a Zolvit legal professional to ensure compliance with state laws and prevent possible legal hurdles.

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