In certain situations, a homeowner may wish to transfer the ownership of one’s property to a person or an institution, such as a legal heir, spouse, sibling, trust, or company. This is usually done to avoid the chances of property succession or inheritance disputes in the future. In most cases, a homeowner opts for the property transfer when nearing the golden years of one’s life.
However, a property transfer doesn’t occur merely by handing over the keys to the transferee. Instead, it can be done through a legal process that involves the formulation of a gift deed.
In this article, Piramal Realty elaborates on:
- Gift deed meaning
- Gift deed rules
- Gift deed registration charges
- Gift deed procedure
- Other details one must know before gifting a house
What is a gift deed?
A gift deed can be defined as a legal agreement that allows a person to voluntarily transfer or gift a property to another person or institution. The property to be gifted can be movable or immovable. The person transferring the property is known as the “donor”, and the person or institution receiving the property is known as the “donee”.
Unlike a will, where the property transfer takes place after the death of the property owner, a gift deed is immediately executable. It means that the transfer of property is instant, and the donee is not required to approach a court of law for the execution of the deed.
Understanding Gift Deed Rules
The rules and procedures for preparing a gift deed for a property are defined in the Transfer of Property Act, 1882. Below are the property gift deed rules one must remember:
- A gift deed can be executed for both movable and immovable properties. Movable properties include jewellery, vehicles, furniture, and immovable properties are those that are attached to the land and cannot be moved from one place to another.
- The property for which a gift deed is being prepared must physically exist at the time of the formulation of the deed.
- Only the legal owner of the property can prepare a gift deed. The legal owner can be defined as the person or entity whose name is mentioned in a property’s title deed. They may or may not be the current occupant of the property.
- A gift deed can be used for voluntarily gifting a property solely out of love or affection. It must not involve any monetary exchange or coercion.
- There is a specific format for preparing a gift deed in India. One can get the gift deed format on the respective state government’s website. Residents of Maharashtra can click here to download the gift deed format for movable/immovable property.
- The following components must be included in a gift deed – the relationship between the donor and the donee, details of the property that is to be transferred, property rights of the donee, details of both the donor and the donee, such as their names, age, address, etc.
- A gift deed becomes valid only after its registration and the payment of the stamp duty. The registration of a gift deed can be done at a registrar or sub-registrar’s office under whose jurisdiction the property lies.
What are Stamp Duty and Registration Charges on Gift Deed?
Stamp duty and registration charges on Gift Deeds may vary from one state to another. They may also depend on the type of gift deed, i.e., whether it is for movable or immovable property. As per Article 34 of the Bombay Stamp Act, 1958 the applicable stamp duty on a gift deed for an immovable property to a blood relative including wife, husband, brother, sister or to any lineal ascendant or descendant of the donor is at 3% of the property’s market value, and in all other cases the stamp duty is calculated at 5% of the property’s market value.
What are the Documents Required for a Gift Deed?
Here are the documents required for preparing a gift deed of a property:
- Original gift deed prepared on a stamp paper.
- Document proving the relation between the donor and done if it is gifted to a blood relative of a donor.
- PAN cards and address proof of both the donor and the done.
- Original sale deed or title deed in the name of the donor.
- Passport-sized photographs of both the donor and the done.
- No Objection Certificate (NOC) for land/flat transfer from competent authority or co-operative housing society, as the case may be.
- Identity proof of the witnesses.
It’s common for homeowners to come across questions like what is a gift deed of a property and how to make a gift deed. Piramal Realty has tried to answer all such questions to help property owners safely hand over their prized possession to their near and dear ones.
Disclaimer- This article is based on the information publicly available for general use as well as reference links mentioned herein. We do not claim any responsibility regarding the genuineness of the same. The information provided herein does not, and is not intended to, constitute legal advice; instead, it is for general informational purposes only. We expressly disclaim /disown any liability, which may arise due to any decision taken by any person/s basis the article hereof. Readers should obtain separate advice with respect to any particular information provided herein.