How to transfer your property

    When it comes to transferring property, a sales deed may not always fit the bill, especially if you want to pass it on to relatives. In such cases, instruments like a gift deed or relinquishment deed can come to your rescue. However, blindly choosing either can lead to problems. “You must understand the purpose of each document before getting it drafted. Know the benefits as well as drawbacks of each,” says Vaibhav Sankla, director, H&R Block. “These documents are designed to play a specific role in the transfer of property and, hence, it is important to consult a lawyer,” he adds. 
GIFT DEED 
This document allows you to gift your assets or transfer ownership without any exchange of money. To gift immovable property, you just have to draft the document on a stamp paper, have it attested by two witnesses and register it. Registering a gift deed with the sub-registrar of assurances is mandatory as per Section 17 of the Registration Act, 1908, failing which the transfer will be invalid. Besides, such a transfer is irrevocable. Once the property is gifted, it belongs to the beneficiary and you cannot reverse the transfer or even ask for monetary compensation. 
    However, if you want to gift movable property like jewellery, registration is not compulsory. At the same time, a mere entry in an account book is not sufficient to establish a transfer. Apart from physically handing over the property, you need to back it with a gift deed. The process is slightly different if you are gifting company shares. You will have to fill out the share transfer form and submit it to the company or registrar, and the transfer agent of the firm. Once again, get a gift deed drawn and executed to complete the transfer, but the document need not be registered. 
Advantages 
The biggest benefit is that there is no tax implication if you are gifting property to certain relatives (see box). However, you still have to pay stamp duty, which can vary from 1-8% for immovable property, depending on the state in which the transfer takes place. If you are gifting property to a non-relative, the stamp duty would be higher at 5-11%. You have to pay this duty even in the case of movable property. Expect to shell out 2-8% in case of relatives, and 3-8% for non-relatives. For physical shares, the stamp duty is 0.25%, but if these are in the demat form, you don’t have to pay. 
Limitations 
Though a gift deed cannot be revoked, it can be challenged in court, coercion and fraud being the most common grounds. So, if you have been tricked into gifting property, you can take the matter to court and have the transfer reversed. It can also be challenged on the grounds that the donor was not of sound mind or a minor. “You can never have a challenge-free gift deed, but consult a lawyer while drafting it so that the chances of it being challenged are minimum,” says Aakanksha Joshi, senior associate, Economic Laws Practice. Also, you cannot gift a property that’s held jointly. 
RELINQUISHMENT DEED 
This document is quite different from a gift deed, though the legal implications are the same. You can use this instrument if you want to transfer your rights in a particular property to another co-owner. Such a transfer is also irrevocable even if it is without any exchange of money. As with all documents related to the transfer of immovable property, a relinquishment deed needs to be signed by both parties and registered. The stamp duty is similar to that for a gift deed. However, there is no discount for relatives, nor are there any tax benefits. Also, both stamp duty and tax will be applicable only on the portion of the property that you relinquish, not on its total value. You can also use this deed to transfer movable property without registration, but it is typically used for immovable property. 
Advantages 
It allows seamless transfer of your share in a jointly-held property. “This document is most commonly used when a person dies without leaving behind a will and all siblings end up inheriting the property,” explains Joshi. Unlike a gift deed, you can draw the relinquishment deed for monetary consideration. 
Limitations 
There are no tax benefits, for as per the tax laws, the term ‘transfer’ includes relinquishment, not gift. Hence, when you are relinquishing property for monetary consideration, it will result in capital gains for the transferor. “If the consideration is less than the stamp duty value of the property, the difference between the stamp duty and the consideration will be taxed in the hands of the buyer,” says Sankla. If you relinquish it without any consideration, the stamp duty value of the property will be its sales price.Image

Lease deeds, Power of Attorney to be compulsory under new bill

A bill to amend the century old Registration Act to help check the loss of revenue to the state seeks to make registration of lease deeds of immovable properties and Power of Attorney compulsory irrespective of their term.

The Bill also makes it mandatory for every person presenting the document at the registration office to affix his passport size photograph and get photographed by a digital camera on the document.

The Registration (Amendment) Bill, 2013, to further amend the Registration Bill, 1908, introduced in the Rajya Sabha today by Rural Development Minister Jairam Ramesh, also seeks to make provisions for the recovery of deficit registration fee and refund of excess fee.

It also provides that Wills or authority to adopt a Will and any document notified by the state government may be registered at the option of the parties.

The Bill also provides that immovable property can be registered only in the state in which it is actually located, but the Central or State government can allow a particular document to be registered in any registration office.

The Bill also includes a new section which prohibits the registration of certain documents relating to transaction which is prohibited by any central or state act, besides prohibiting registration of any document which is likely to affect the accrued interest in immovable properties of central or state government, local bodies and other properties as may be notified by state government.

The Rural Development Ministry’s Bill has been brought in after incorporating the recommendations of a Committee headed by Secretary, Department of Land Resources to suggest amendments to the Registration Act, 1908.

As the century-old Act had many lacunae whereby many exploited its provisions by not getting their lease deeds below one year for their immovable property registered, thus causing revenue loss to the state. 

Lease deeds, Power of Attorney to be compulsory under new bill

A bill to amend the century old Registration Act to help check the loss of revenue to the state seeks to make registration of lease deeds of immovable properties and Power of Attorney compulsory irrespective of their term.

The Bill also makes it mandatory for every person presenting the document at the registration office to affix his passport size photograph and get photographed by a digital camera on the document.

The Registration (Amendment) Bill, 2013, to further amend the Registration Bill, 1908, introduced in the Rajya Sabha today by Rural Development Minister Jairam Ramesh, also seeks to make provisions for the recovery of deficit registration fee and refund of excess fee.

It also provides that Wills or authority to adopt a Will and any document notified by the state government may be registered at the option of the parties.

The Bill also provides that immovable property can be registered only in the state in which it is actually located, but the Central or State government can allow a particular document to be registered in any registration office.

The Bill also includes a new section which prohibits the registration of certain documents relating to transaction which is prohibited by any central or state act, besides prohibiting registration of any document which is likely to affect the accrued interest in immovable properties of central or state government, local bodies and other properties as may be notified by state government.

The Rural Development Ministry’s Bill has been brought in after incorporating the recommendations of a Committee headed by Secretary, Department of Land Resources to suggest amendments to the Registration Act, 1908.

As the century-old Act had many lacunae whereby many exploited its provisions by not getting their lease deeds below one year for their immovable property registered, thus causing revenue loss to the state. 

Real estate sector to remain unaffected by inclusion in NCR: Experts

Three new inclusions to NCR viz Mahendragarh and Bhiwani in Haryana and Bharatpur in Rajasthan would not impact real estate sector negatively said the industry experts. This was in response to a query whether the step would bring down prices of the properties in Gurgaon. This brings the tally to 11 districts of Haryana in the NCR region out of twenty.

“People still have to throng past Manesar in Gurgaon. Residential market or even commercial real estate market response is very far sighted,” said Sunil Chutani, managing director Terra Realcon.

Chairman and managing director of Trehan Home Developers, Harsha Trehan echoed similar sentiments. “Lot of vacant land is still available in other parts of the NCR such as Noida, Greater Noida, Faridabad, Gurgaon, Manesar, Bhiwadi, Kundli, etc. The point is when end-user is not going to these far off places, why would he go to newer areas recently added to the NCR map.”

Trehan further clarified, “As of now people still have to move into these places. A lot of investors have invested in various areas of these regions but actual buyers have not come in. For example some of the newer areas in Gurgaon have a lot of investors and because of high price end user are not coming.”

Chutani said though people have this in their knowledge, it would still take some time for these areas to register in people’s mind. “This is evident from response to other areas closer to Delhi.”

Sunil Chutani however cautioned the buyers about certain developers’ intentions. “Some developers might try to lure the buyers/investors by highlighting the far off future prospects.”

Many experts believe that instead of making buyers confused about the prospects of new regions, the government should try to make the market of existing places more lucrative through various means.

Sumit Berry, managing director of BDI Group did not endorse the idea of addition of new districts. “I believe the government should first concentrate on present NCR areas. A lot of infrastructural development is needed in places such as Bhiwadi and Manesar. So I would have been happy if NCR Planning Board would have announced some development plans for the present regions.”

Sanjay Rastogi of Saviour Builders also emphasized on giving more importance to existing areas first and thereafter adding newer areas. “Existing area should get government support when it comes to job creation and infrastructural development to meet the intention then add new regions.”

Also, there are suggestions that Noida and Greater Noida market will witness a northward movement. “The areas in these two places are likely to witness hike between Rs 1000 and Rs 2500 per square feet. Amidst such circumstances, Yamuna Expressway area is the right place to invest as of now rates are cheaper, despite the fact that Yamuna Expressway is the future,” informed Amit Gupta director of Orris Group.

Gupta rubbished any thought of correction in prices happening in immediate future in Gurgaon Noida or any other NCR region. He also sees this as a move to ease out some pressure from the Delhi-NCR region