3 Important Points to Consider While Transfer Of Property Ownership
You own property and now wish to transfer its legal title to someone else. Due to legal complications involved in the process, you need to proceed cautiously.
While executing the transfer of property ownership, legal assistance should be compulsorily sought to ensure that you or the new owner doesn’t run into any trouble.
A number of factors have to be considered during transfer, but 3 important points should be essentially taken care of during transfer of property.
1) Simple Sales Deed does not Suffice for All Transfer Types
Transferring property through an agreement on sales deed does not cater to all situations. Suppose, you want to gift the property to a relative without seeking any monetary reimbursement, then gift deed is the right instrument.
The drafted deed should be endorsed by 2 witnesses for being registered in the office of sub-registrar of assurances. 1908’s Registration Act asserts under Section 17 the irrevocability of such transfer.
Once the gift deed is executed, the same cannot be reversed in future, and you cannot claim any pecuniary benefit against the property.
You can get a ‘Will Deed’ prepared to allow possession of the property by your relatives after your demise. Without a deed, the property is transferred to another beneficiary as per the clauses of ‘Law of Succession’.
After the death of the testator, the successor has to apply to local civil authority with the copy of will deed, testator’s death and succession certificate to get the property transferred in one’s name.
If you are desirous of transferring your property ownership rights to co-owner irrevocably, both of you are required to sign and register the ‘Relinquishment Deed’.
No exemption on tax or stamp duty can be claimed although no money exchanges hands.
2) Always Consult An Expert Lawyer For Executing Property Transfers
Since house deed transfer involves complex paperwork, you cannot take the risk of getting documents drafted without consulting a discerning lawyer.
Different deed types have their own advantages and limitations; the ramifications of which may be experienced by the new owner in the long run.
Further, if a relative has compelled you to gift the property, your lawyer can help you raise the matter in the course for seeking a reversal.
Prospects of your gift being challenged by other relatives are high. As such, your lawyer can help in framing a strong draft that would minimize challenges in future.
If a ‘Will Deed’ has been prepared by you, your lawyer can help in getting it revoked if you feel that the successor is not worthy.
Your lawyer would help resolve a crisis in the event of your death without a valid ‘will’ in place. The crisis that shows up among inheritors of your property can be resolved with the help of relinquishment deed.
3) Understand the Tax Implications Of Property Transfer
Property gifted to certain relatives (spouse, any member in one’s own Hindu Undivided Family, brothers and sisters of either parent, siblings of the spouse with their respective spouses, your lineal descendants or ascendants) does not attract transaction taxes.
However, stamp duty has to be inevitably paid when you transfer ownership of the house to a family member. The duty ranges from 1-8% depending upon the state where the property is located.
Stamp duty varies from 5-11% if the property is gifted to a non-relative.
When relinquishing your property, if the monetary compensation sought by you is lesser than the property’s prevailing market value in the area, then the difference would be taxed by the buyer.
However, if the property is relinquished without any exchange of money, its stamp duty would be equivalent to sale valuation as per existing rates in the area.
The aforementioned points should be considered with due diligence when executing any property deed transfer.
This would help you remain immune from any legal or other hassles in the long run.