Consider These Points Before Gifting a Property

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Consider These Points Before Gifting a
Property March 26, 2018 Real Estate
gifting a house to a family member, gifting
property, gifting property to children, gifting
property to family member, gifting property to
son, gifting property within a family, house
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The joy of gifting is enormous. But, there could
be some financial implications of doing so,
especially if you plan to gift someone a
property. Here are specific points that must
consider before you actually decide to confer
upon yet another owner of the property through a
gift deed. Do I need to pay taxes if I gift the
property to a relative? The answer is no. None of
you (you and the relative you are gifting) will
be liable to pay the taxes in the case the
transfer takes place through the gift deed. You
will, however, have to pay the stamp duty as well
as the registration charges on the transaction to
give it legal validity. But, if you plan to
transfer the property which has the value of over
Rs 50,000 to someone who isn't your relative, the
recipient will provide to pay the taxes since the
financial year under the head income from other
sources. What if you want to gift cash gained
from property sale? In such cases, the recipient
might actually have to pay the taxes if he or she
isn't your relative. Under tax law, if one gets
the gift worth Rs 50,000 in a financial year, one
will be liable to pay the taxes under the head
income from other sources. If proceeds are
transferred to, say, son's account, he won't be
liable to pay any taxes. What if you gift assets
during a lifetime? In case, you have parted ways
with the assets through registered gift deed, the
change of the ownership takes place after
immediately. A gift deed becomes binding lawfully
after it has been registered giving the stamp
duty for the transaction during the lifetime and
witnesses have arrested it. As per the provisions
of Registration Act, 1908, the donor must get the
registering of deed within 4 months of executing
the same. If you thought the gift deed
transferred the property to say, an NGO, it
immediately can claim the ownership of the
property.
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Can you take the gift back?
The answer is yes, but here is the caveat. As per
the Section 12 of T ransfer of Property Act,
1982, unless the donor specifies in the
registered contract that keeps him a right to
take back the gift, revoking deals wont be
possible. Also, you could keep partial rights
over the gift. For example, you transfer the gift
deed two plots to the distant relative at the
same time keeping the right to revoke transfer
over the second plot. At a later stage, you wont
be able to claim the ownership over the prime
plot. What if you want to gift property after
demise? Irrespective of willingness to gift the
assets, you may not like necessarily to part the
ways with it during the lifetime to make sure
that transfer must be done through a will, not a
gift deed. When you create the will, you have the
liberty to make the changes in it as and when
they deem fit, something you dont enjoy if the
property transfer has actually taken place
through the gift deed. Who pays dues after the
property is gifted? Under the provisions of the
property transfer the law, after the asset is
completely conferred upon the new person through
the gift deed, the recipient of the gift will
actually be liable to pay the pending dues.
Suppose your uncle gifted the flat, for which he
is liable to pay Rs 50,000 as the electricity,
water and utility bills. The responsibility of
paying the dues rests with you. Do you still pay
a stamp duty if you gift assets to charitable
trust? Depending on prevailing the law in the
state and the manner in which deed is generated,
the stamp duty might actually be waived or
reduced if you gift assets to the charitable
organization. However, in case, you gift the
property to non-governmental organization (NGO),
you wont have to pay the stamp duty. Keep in
mind that not all the NGOs are permitted to
accept the gifts of property and land. Can you
gift the property that you expected to own in the
future? Such a contract, if it is made, is termed
void as per the law. What is recipient doesnt
accept the gift? To make the gift deed valid
legally, the beneficiary has to actually accept
it in the lifetime of the donor. In case, he does
fail to do so, the contract would turn the void
and ownership of property would lie with the
donor.
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