There are two main ways of passing on property to the next generation, a gift deed and a will. Both are instruments of transferring property legally. But the biggest difference is that a gift deed transfers the property during lifetime, while a will is effective after death. Let’s understand…
1. Gift Deed: This is a permanent process. Once the property is transferred, the owner loses the right over it. So, hand over the property only to a person you trust completely. Giving a large portion of the property to one person can also lead to disputes among other heirs.
Signatures of two witnesses required
- Preparation of deed: This includes details of the donor, recipient and the property.
- Requirement of witnesses: Signatures of two witnesses are required.
- Stamp duty and registration: Stamp duty varies from state to state.
- Maharashtra: Stamp duty for blood relation is ₹200 plus 1 per cent metropolitan cess.
- Uttar Pradesh: Stamp duty for blood relation can go up to ₹5,000.
- Tax exemption for relatives: Property given to close relatives is tax free.
- Tax for non-relatives: Property worth more than ₹50,000 is taxable.
- Capital gains tax: The recipient has to pay capital gains tax on selling the property, which depends on the original purchase price of the property.
- Will: A will is a legal document that determines who will be distributed your property after your death and how. The biggest advantage is that you retain the rights over the property for life. You can change the will at any time.
Will Process
- Making a will: This clarifies who will be distributed your property and how.
- Witness requirement: The will needs to be signed by two witnesses.
Registration (optional): Not mandatory, but it provides legal protection.
- No inheritance tax: There is no inheritance tax on property transfer through a will in India.
- Capital gains tax: The heir will pay capital gains tax on selling the property.