If you are looking for ways to transfer your immovable assets, you have
three legal options: sale deed, gift deed and relinquishment deed.
However, you can’t pick one of them randomly as each of these instruments play
a specific role.
Sale deed
It is the most widely used means when we sell our property for
monetary consideration. Also known as transfer deed, a sale deed has
to be registered at the sub-registrar’s office, after which the property gets
transferred to the new owner. The person buying the property need not be
related to you.
Advantages: It is an easy and a fool-proof way to transfer a
property. A registered sale deed is a proof that you have sold your
property. It will help prevent forgeries and frauds as the transaction
information will be in the public domain.
Limitations: The selling of property results in long and short-term
capital gains.
Gift deed
Under this deed, you can gift your immoveable and moveable property
without any exchange for money. To gift any immoveable property, all you have
to do is to draft a deed on a stamp paper, attested by two witnesses, and
register it with the registrar’s office. Section 17 of
the Registration Act, 1908, mandates that transfer of an immoveable
property should be registered, failing which it would become invalid. However,
one can gift moveable property such as jewellery or car without any
registration. The gift deed is irrevocable and the beneficiary is the
rightful owner after the deed has been transferred.
Advantages: There are no tax implications if you are gifting a
property to your relative. Here, a relative includes your spouse, sibling,
siblings of your spouse, siblings of your parents, etc.
Outside this, a property received by an individual will be taxable
if the stamp duty value of such a property received without
consideration exceeds Rs 50,000.
Limitations: Although a gift deed can’t be revoked, it can be
challenged in the court on the grounds of coercion or fraud.
Relinquishment deed
Advantages: A relinquishment deed allows seamless transfer if a
property is owned jointly. It is commonly used when a person dies without
leaving a will and the legal heirs end up inheriting the property.
Limitations: Tax laws put relinquishment under the head of
‘transfer’ and not gift. Hence, there are no tax benefits.
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