Gifting a property: Know the taxes and stamp duty involved in the gift deed

These days gifting property to loved ones is greatly preferred by people around. However, with the transfer of such auspicious gift, there are certain legal regulations to be considered. Since this transfer of rights of the asset is going to include no consideration; there are certain taxes and duties that need to be paid in order to mark the legal existence of the property. We are therefore going to discuss certain important points when you decide to confer your property through a gift deed.

Involvement of taxes when you gift your property to relatives

When you transfer property to your relatives through a gift deed, you or your relative is not liable for the payment of any taxes. However, you will have to incur registration charges and stamp duty which is further going to create the legal vitality of the property. But in case the transfer of property is of worth more than Rs. 50,000 and that too to a person who is not your relative; The recipient would be liable for tax payment of that financial year under income from other sources.

Gifting of cash gained from sale of property

You may also think of gifting that cash which is received from a property sale. In this case, the recipient would be liable for tax payments if he is not your relative. As per the regulation if a person receives Rs 50,000 or more as gift then he is subjected to tax payment. However when proceeds are transferred to a family member say, to your son’s account there would be no tax liabilities on him.

Gifting of assets during your lifetime

When you have made up your mind for the transfer assets as gifts, there are certain essentials that need to be considered in order to ensure the legality of the property. Registration and the payment of stamp duty are the most important tasks in this respect. Only after this, the gift deed would be known to exist. Also, know that as soon as the rights are transferred through documentation the recipient can claim their rights on the property. You will be required to get the deed registered within four months along with two witnesses having attested it.

Can a gift be taken back?

Well, this can be possible but with an admonition. You can revoke the transfer of rights over the property only when you mention the same in the contract. Therefore if you have any insights of such situations, it is better to set the contract in a respective manner mentioning the terms and conditions. You can also go for partial ownership when gifting property to a distant relative. For instance, you gift two plots to your relative; you can mention in the contract, the revoke of rights on the second plot. This way in future you can claim and take back the second plot; however, you may not have any rights on the first one.

Gifting property after your demise

If you are willing to transfer the rights of your property after your demise, then it can be best done through a will. There are many benefits that a will offers you. When you opt for a will, the transfer of property will take place only after your life, unlike the gift deed which allows the recipient to claim their rights immediately after registration.

Who is liable for the dues?

When the rights of property are conferred upon a new person, all dues and payments related to the same are now the responsibility of the recipient. These dues will include all the expenses that are done in respect of the property namely, electricity bills, bills for water supply, also the taxes involved.

When gifting property to a charitable trust

Depending on the laws of your state and the creation of the deed, the stamp duty is known to be reduced or waived when you are gifting property to a charitable organization. In case you are gifting property to an NGO, you will not be liable to pay any stamp duty. You should also know that all NGOs cannot accept gifts of land and property.

As per the law, you cannot gift a property which you assume to own in future. Such contracts are declared void. Also, the gift deed would create legal binding only when the recipient accepts the gift. If the acceptance of the property is refused by the recipient, the gift deed will turn void.

So if you are looking to gift a property to someone you may consider the above-mentioned points.


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