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How to Transfer Property Title Between Family Members in India

In India, understanding how to transfer property title between family members involves following specific legal procedures and a series of crucial steps. Ensuring accurate recording and recognition of the property’s legal ownership is contingent upon the completion of this process.

 

Transfer of Property

Transferring ownership of property from one individual to another is referred to as property transfer. This can occur amongst family members in a number of ways, including inheritance, sale, or gift deeds. Here, we’ll look at the three main ways that family members might transfer title to property: inheritance, gift, and relinquishment.

1. Gift Deed

A gift deed is a legal document used to voluntarily transfer property from one person to another without any exchange of money. This method is commonly used when transferring property within family members as a gesture of love and affection.

Can a Gift Deed of Property Be Sold?

In India, real estate acquired via a gift deed is indeed tradable. But first, the property needs to be legally transferred to the recipient’s name before it can be sold. In addition, before the sale is finalized, all applicable taxes must be paid.

What Is an Ancestral Property Gift Deed?

A gift deed of ancestral property is a legal document used to transfer ownership of inherited property from one family member to another. Property that has been inherited from ancestors and handed down through the generations is referred to as ancestral property. When a gift deed is signed, the giver gives up ownership of the asset and the recipient becomes the only owner.

What is a Sale of Property Gift Deed?

Given that a gift deed does not entail a cash exchange, the term “gift deed of property sale” may be unclear. On the other hand, it describes the act of giving ownership of property to someone else as a gift. The property is transferred as a gift, with no money exchanged hands. Within families, this technique is frequently employed to transfer property.

Required Records for a Gift Deed

Generally speaking, the following paperwork is needed in order to register a gift deed:

  • Documents proving the recipient’s and donor’s identities (passport, PAN card, Aadhar card, etc.).
  • Provide evidence of both parties (such as voter IDs and electricity bills).
    original title deeds, sale agreements, and other property records.
  • If appropriate, a NOC (No Objection Certificate) from the local government or society.
  • A certificate of encumbrance guarantees that the property is free from any legal obligations.
  • A pair of passport-sized photos showing the recipient and the donor.
    Stamp Duty and Registration Fee Payment

An important aspect of registering gift deeds is stamp duty. Depending on the state where the property is located, different stamp duties apply. The sub-registrar’s office is where registration payments must also be paid. These costs guarantee that the transfer is documented legally.



The Sub-Registrar's Office Registration Procedure

Submission of the drafted and signed gift deed.

    • Identity and documentation verification for the donor, recipient, and witnesses.
      full payment of the registration and stamp duty.
    • The donor, receiver, and witnesses signing the registrar’s documents.
      issuance of a gift deed receipt and registered copy.
    • The transfer’s legal validity and bindingness are guaranteed throughout the entire process.

       

Steps Following Registration

The beneficiary must amend the property records after filing the gift deed. This incorporates:

  • Submitting a request to the local municipal office to change the property’s ownership to the recipient.
  • Submitting the identity documents, registered gift deed, and other required documentation for the mutation.
  • To prevent future disagreements, make sure the new ownership is reflected in the municipal records.

Tax Implications of a Gift Deed

1. Income Tax

Under Section 56(2) of the Income Tax Act, 1961, property received as a gift from specified relatives (like spouse, children, siblings, etc.) is exempt from income tax. However, if the property is gifted by someone outside the specified relations, the recipient may be liable to pay tax on the property’s market value.

Stamp Duty and Registration Charges

Stamp duty and registration charges are state-specific and must be paid during the registration process. These charges are generally a percentage of the property’s market value and ensure the legal recording of the transfer.

Steps to Create a Gift Deed:

  • Drafting the Gift Deed: Consult a lawyer to draft the gift deed. The deed should include details about the donor (person giving the property), donee (person receiving the property), description of the property, and the fact that the transfer is without any monetary consideration.
  • Acceptance of Gift: The donee must accept the gift during the lifetime of the donor for the gift deed to be valid.
  • Stamp Duty and Registration: Pay the applicable stamp duty for the gift deed, which varies by state. After paying the stamp duty, register the gift deed with the local sub-registrar’s office. Both the donor and donee must be present for registration, along with two witnesses.
  • Submission of Documents: Submit required documents such as identification proofs, address proofs, original property deed, and photographs of the donor and donee.
  • Registration Process: The sub-registrar will verify the documents, and once satisfied, the gift deed will be registered. The donee will receive a registered copy of the gift deed, officially transferring the property title.

2. Relinquishment Deed

A relinquishment deed is used when one co-owner of a property wishes to transfer their share to another co-owner, often within the family. This is common in cases where property is inherited and the co-owners want to consolidate ownership

Steps to Create a Relinquishment Deed:

  • Drafting the Deed: Have a lawyer draft the relinquishment deed, specifying the details of the relinquishing party, the party receiving the share, and a description of the property.
  • Stamp Duty and Registration: Pay the required stamp duty for the relinquishment deed. The stamp duty varies depending on the state.
  • Registration with Sub-Registrar: Register the deed at the sub-registrar’s office. Both parties involved in the relinquishment must be present along with two witnesses.
  • Submission of Documents: Submit necessary documents including identification proofs, address proofs, original property documents, and photographs of the parties.
  • Registration Process: The sub-registrar will review the documents and once approved, the deed will be registered. The receiving party will get a registered copy of the deed, legally transferring the share of the property.

3. Inheritance

Inheritance is the process through which property is passed down to heirs after the owner’s death, either through a will (testate) or by the laws of inheritance if there is no will (intestate).

 

Steps for Property Transfer through Inheritance:

Obtaining the Death Certificate: The first step is to obtain the death certificate of the deceased from the municipal corporation.

Will or Succession Certificate:

  • With a Will: If the deceased left a will, the property is distributed according to the terms of the will. The executor of the will must apply for probate from the court to validate the will.
  • Without a Will: If there is no will, the legal heirs must obtain a succession certificate from the court, which lists all the legal heirs entitled to inherit the property.
  • Mutation of Property: The legal heirs must apply for mutation of property in their names at the local municipal office. Mutation is the process of updating the property records in the municipal office.
  • Submission of Documents: Submit the required documents, which include the death certificate, will or succession certificate, identification proofs of the heirs, and original property documents.
  • Verification and Mutation Process: The municipal authority will verify the documents and update the property records to reflect the new owners. This process ensures that the legal heirs are now the official owners of the property.

Common Documents Required for Property Transfer

Regardless of the method of transfer, certain documents are commonly required:

  • Identification Proofs: Aadhar card, PAN card, or passport of both parties.
  • Address Proofs: Utility bills, voter ID, or other official documents.
  • Original Property Deed: Proof of ownership of the property.
  • NOC (No Objection Certificate): From the society or local authority, if applicable.
  • Encumbrance Certificate: This shows that the property is free from any legal or financial liabilities.
  • Affidavits and Undertakings: As required by the local authorities.

Tax Implications

Property transfers can have tax implications:

  • Gift Deed: If property is transferred via a gift deed between specified relatives (such as spouse, children, siblings, etc.), it is exempt from income tax under Section 56(2) of the Income Tax Act, 1961.
  • Sale Deed: If property is sold to a family member, capital gains tax may apply. The seller must pay tax on the profit earned from the sale.
  • Stamp Duty: Stamp duty must be paid on the gift deed, relinquishment deed, or sale deed. The rates vary by state.
Practical Tips
  • Legal Advice: Always seek legal advice to understand the implications and ensure all procedures are followed correctly.
  • Documentation: Keep meticulous records of all documents and receipts.

Local Variations: Procedures and fees can vary by state and local jurisdictions, so verify local requirements.

Conclusion

Transferring property title between family members in India involves understanding and following legal procedures to ensure a smooth and legitimate process. Whether through a gift deed, relinquishment deed, or inheritance, each method has specific steps and requirements. Ensuring proper documentation, seeking legal assistance, and understanding tax implications are crucial for a successful property transfer. By following these guidelines, family members can navigate the complexities of property transfer and secure their rights and interests effectively.

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