Things to know before transferring a property by Gift Deed or a Will.

By Abhay Shah, Realty Quarter

Property transfer via a GIFT:

When you want to pass a property so that the donee instantly enjoys the property, you can do this through a gift. Until you are qualified to contract, you can gift to anyone a self-acquired property in compliance with the Indian Contract Act. Anyone who is sound minded and not a minor may enter into an agreement, provided that he or she is not an unreleased insolvent.

A property can be gifted through a gift deed. As in the execution of the gift deed, you have to pay the stamp duty on the market value of the property. In the event that the gift is to be made in favour of some close relatives, certain states such as Maharashtra have concession clauses on stamp duty payment.

Important factors while transferring property by a GIFT DEED:

1) A gift can be made in favour of any person who lives when the gift is made.

2) The gift must also be accepted during the lifetime of the individual making the gift by the donee, or anyone else on his behalf.

3) According to the regulations of the Transfer of Property Act, each transaction involving the transfer of property over 100 rupees should be registered with the Registrar’s office of the region.

Property transfer via a WILL:

The transfer of any property can also be created by manner of a will, in this method after the death of the individual carrying out the will; transfer the vesting of the property will take effect. According to the prevalent laws, a will is not needed to be stamped or registered. A will is, therefore, the cheapest way to transfer your property to the people you want.

Important factors while transferring property by a WILL:

1) While it is not mandatory to register a will, registration of the will is always advisable to minimize disputes regarding the succession of your properties.

2) The individual succeeding in the assets of the deceased is not entitled to any estate duty.

3) In addition, any asset inherited, either under a will or through the laws of succession, is exempt from income tax laws, as well as Section 56(2), which treats the certain transfer of assets without adequate consideration or with inadequate consideration, as income of the recipient.

Gift vs Will How to decide?

It is advisable to legacy your assets with a will when you want only to make sure that the assets that you own pass on to the people you choose, only after death and you want to take advantage and control those assets over your lifetime. A will is also desirable in order to guarantee that your assets can be properly transferred after your death and to allow your nominees to inherit your properties.

But if you want to help somebody who needs immediate help, it can only be accomplished by making a gift. Property transfer by a gift should only be used if it is necessary for particular conditions. It may leave you in a challenging situation in your old age when you transfer all or a large part of your properties to your legal heirs.

Moreover, it is also not appropriate to move your properties simply for tax planning, because it would be unwise to lose control of your property, simply to save cash in taxes. However, if you are interested in transferring part of your estate throughout your life to avoid any dispute about the property then it is advisable to use a gift.