Articles – Real Estate Deeds Made Easy Since 1997
The Gift of Real Estate: What You Need to Know
Making a home into a gift involves a gift deed. The gift deed legally transfers the title of the property from you, the grantor or donor, to another person or entity. This type of conveyance may be used to convey property as a gift from one family member to another, or to donate property to a nonprofit.
A mere promise to convey the property at some point in the future does not constitute a legally sound gift. A properly drafted deed makes a gift outright—a conveyance for no consideration. In other words, the giver makes the gift unequivocally, with no compensation expected, and no strings attached.
The Components of a Gift Deed
Your effective gift deed must have several traits and components:
- It is created to make an immediate transfer of the owner’s interest in the property, and an actual delivery of the property.
- By the deed’s explicit declaration, no consideration is necessary or expected.
- The deed is signed by the grantor (giver).
- The grantor’s full name and marital status appear on the deed.
- The recipient’s full name, marital status, and actual street address appear on the deed.
- Vesting language, as indicated by state law, describes how your recipient holds title. For example, the main ways of holding residential property in your state may be tenancy by entirety, tenancy in common, or joint tenancy.
- A full and accurate legal description of the property appears.
- Restrictions applicable to the use of the property appear.
A deed that does not meet the legal criteria is revocable. In contrast, a properly created gift is irrevocable after acceptance. (An intended recipient can refuse to accept a deed .) Once your gift is lawfully delivered and accepted, it may not be contested by your family members.
To be sure your deed measures up to the statutory requirements in your state, view available deed forms, including gift deed forms , on Deeds.com.
Giving Your Home to Someone: Financial Planning Ramifications
A number of tax considerations apply to gifts of real property:
- You must pay the gift tax to the Internal Revenue Service. You must also pay any applicable state gift tax. The federal gift tax applies to real estate conveyances between individuals for no consideration, or token consideration.
- Unless the gift goes to your spouse, the transfer of a home property incurs gift and inheritance taxes payable to the Internal Revenue Service by filing Form 709. As the IRS explains, if the recipient ever decides to sell the gift, the recipient’s cost basis will be the same as the cost basis you originally paid for the house. Therefore, if you give a house to a child, that child will one day pay taxes on the (typically steep) capital gains—reflecting taxes due for appreciation of the property value. This means your child will not later qualify to claim the stepped-up cost basis that beneficiaries of wills enjoy to offset capital gains.
- The recipient of your gift need not declare it as income.
- If the property earns income after the conveyance , the recipient will owe state and federal income taxes.
If you own your home as part of a joint tenancy, a tenancy by the entirety, or as community property with the right of survivorship, the gift must be authorized by all grantors’ signatures. Spouses must release marital rights with their signatures—even spouses with no interest in the property described in your gift deed.
Alternatives to Conveying Property by a Gift Deed
There are several benefits to selecting popular alternatives to the gift deed. Here are some prominent categories. (You can find more examples and descriptions here .)
The Revocable Trust
This is a living trust—a document setting forth how your property will be managed—which you can dissolve or amend as you see fit. Such trusts serve to keep assets from going through probate, where they can be contested. Note that your home will continue to be part of your taxable estate.
When you die or become unable to control the trust, a successor trustee steps into your place. You may name a corporate, unbiased trustee.
An advantage to conveying your home at death through a revocable trust, rather than making a gift of the home within your lifetime, is the stepped-up tax basis. This can spare the recipient significant capital gains taxes.
The Irrevocable Trust
With an irrevocable trust, you direct a trustee to manage the trust for a certain outcome. Then, assets, income, and tax returns are shifted to a trustee’s management and control.
Trust assets will pass to your chosen beneficiary upon your death.
The advantage? An irrevocable trust bypasses probate and estate tax. The drawback? This type of trust creates restrictions on selling, refinancing, and having access to the equity of your home while you are alive.
The Transfer on Death Deed
Some states now allow transfer on death deeds for real estate, to convey home ownership after your death. If your state allows it, you may fill out an Affidavit of Death form, sign it with a notary, and thereby convey your home to the beneficiary of your choice.
A transfer on death contains no warranty to protect recipients from claims after they receive the property. Should you have any loans or agreements on the property, these obligations will pass, after your death, to the recipient.
Finishing Up the Gift: Recording the Deed
Record your gift deed in the county where the property is located. The recorder’s office can tell you which materials to append to your filing, the amount of the fee, and accepted payment types. Some states ( North Carolina , for example) require the recording of a gift deed within two years, or the gift is void.
Please note that this article is intended as general information for our readers. It is not a substitute for an attorney’s case-specific advice. Contact a lawyer if you have case-specific questions about gift deeds. Should you have questions concerning state or federal tax law, consult your tax specialist.
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Home » Real Estate Information » GIFT DEEDS: A COMPLETE GUIDE
GIFT DEEDS: A COMPLETE GUIDE
Last Updated -- January 31st, 2022
All people like to give something to the one they love. Although donations are commonplace, few of us understand the legal implications of this process. The ideal way to donate is to give a gift deed . In some cases, the deed will rank above the word ‘Will’. The transfer of property to someone can be paid or given for free. When ownership transfer has nothing to do with currency transactions, this transfer is called a gift deed. The registration of a gift deed does not require any financial reward; however, the entire legal process will be followed for acquiring it. A registered deed of gift is also evidence of its own, and, unlike a will, the transfer of ownership is instantaneous, and you do not have to go to court for enforcement, which saves a lot of time and hassle.
EXPLANATION OF GIFT DEEDS
Documents to register a gift deed includes the voluntary transfer of a gift from a donor to a person without a monetary bonus. Such gift transfers must be registered in accordance with the "Transfer of Property Act". It is a means of tax avoidance. It can be transferred to an actual person or institution; the recipient must receive the gift while the donor is alive.
WHAT CONSTITUTES AS A GIFT
If you register a gift deed on file, it will help avert any litigation that may occur later.
- It must be either static or immovable.
- It must be an existing property; that is, it must exist in the present and should not be a property to be bought in the future.
- It must be transferable.
- It must be tangible.
INCLUSIONS IN A GIFT DEED
- The date and place of the issuance of the document.
- Information about the donor, such as name, address, date of birth, father's name.
- Details of the giver like name, father's name, address, and relationship with the donor.
- Signatures of the donor and the recipient and the signatures of the witnesses (two witnesses) present at the time of the handover.
- Photographs of the witness, donee, and donor.
PROCESS OF MAKING A GIFT DEED
Drafting the first step - The gift deed can be drafted by a lawyer who will enunciate what will be transferred and to whom. A deed is an agreement between the giver, that is, an agreement between the giver and the recipient. Also, it can be said that it's a reciprocal act of giving and receiving at the same time. For the gift to be effective, it must be offered voluntarily by the person, and no coercion or exchange of money is allowed.
Accepting the gift - Acceptance is also an important legal requirement for a valid gift. Once the gift is sent, the recipient must accept the gift for life. Otherwise, the gift will be invalid. The validity of acceptance can be determined through acts such as possession.
Registering the gift - Unless registered, recipients of real estate gifts cannot obtain ownership of such gifts. According to the provisions of Article 123, the Transfer of Property Act, the transfer of ownership can only be carried out during and after registration and post-registration, after being certified by two witnesses.
Donor-Recipient Relationship- If the donor and recipient are blood relatives, some state governments may grant a stamp duty reduction, but if not, it is important to establish the donor-recipient relationship.
Delivery Clause - on the gift, for example, if the recipient can rent or sell the property, etc., these clauses should be mentioned during the delivery of possession of the said property.
Revoking the gift- This mentions the express or tacit action of transferring ownership of the property, revocation of the gift, stating whether you would like the recipient to have inserted a revocation clause in the deed of gift. Both the donor and the recipient must agree to this clause.
Cite any Liabilities - rights or liabilities like if the recipient is eligible to sell off the property or lease it in the future should be mentioned expressly.
HOW TO REGISTER A GIFT DEED
The gift deed can be registered in accordance with the 1908 Registration Act . When registering, the following steps must be followed: The property is evaluated by an expert who evaluates the donated property. It varies from person to person, and the stamp duty on gift deed for women is slightly lower. Stamp duty on gift deeds also varies from state to state and can be viewed on the official website of the state government.
Gifts for Minors
From a legal point of view, the owner of the property can give gifts to others. An exception to this rule is that the donor or recipient is a minor. Minors are not allowed to sign contracts; therefore, they cannot give up their property. If the donor is a minor, the donation has no legal effect. If the recipient is a minor, the natural guardian can accept the gift on their behalf. Donating property, if the gift is onerous, then the obligation can only be imposed on minors. When the recipient grows up, he/she will either accept the encumbrance or return the gift.
Is a verbal real estate gift legal?
According to Article 123 of the Transfer of Property Act, it is very important to understand that verbal transfer and unregistered real estate deals have no legal effect. No rights will be granted if the delivery does not follow the legal procedures.
PROS AND CONS
- It runs for the life of the donor, and the transfer is instantaneous while the will lasts after death.
- The deed of a gift must be recorded; only then is it effective.
- Registering makes you less prone to litigation. On the other hand, the "will" is prone to litigation.
- The transfer via a deed of gift is tax-free in the hands of the donor and the recipient. It can be changed as often as possible.
- In the case of deeds of gift, there are additional costs in the form of stamp duty.
- Stamp duty varies from state to state.
CHARGES FOR A GIFT DEED REGISTRATION
To register the gift certificate, you must pay stamp duty, which varies from state to state. You can also pay stamp duty online or at the registry office. Below are the mentioned rates for stamp duty at a few states-
GIFT DEEDS AND TAX IMPLICATION
Gift Deeds must be reported on an income tax return (ITR). In 1998, the Gift Tax Act of 1958 was repealed, but it came into force again in 2004. If the amount of stamp duty exceeds INR 50,000 and the property received does not obtain the required allowance, the tax implication would be enormous. For example, the tax rebate is INR 1.5 Lakhs, and the stamp duty is INR 4 lakhs, then the penultimate difference between is more than INR 50,000.
HOW TO REVOKE A GIFT DEED
According to Article 126 of the "Transfer of Property Act", the gift contract can be revoked if the following conditions are met:
- The donor and the recipient agree to cancel the donation.
- The transfer of ownership is based only on the wishes of the one who transfers the said gift deed, and the receiver is unwilling to accept the assets.
- For property created as part of a gift, this situation is not illegal or immoral. This means that the gift is not fraudulent. However, legal counsel should be sought to clear the underlying process.
- Remember, once the gift contract is ready, it cannot be revoked unless a revocation clause is added. Be sure to add an "exit clause" to avoid complications in the future.
CAN A GIFT DEED BE ALLOWED TO REGISTER IN A PERSON’S PRIVATE RESIDENCE
According to Article 31 of the Registration Act, it herein allows the registrar to visit the apartment or home of a person who wants to submit a gift deed certificate as evidence of a special reason (such as a physical disability). To register and accept this type of deed, the person in charge of the record must be convinced that the specific reasons provided are sufficient.
RELINQUISHMENT DEEDS AND GIFT DEEDS
Relinquishment deeds and gifts are different types of property transfer in the eyes of the law. The act of transfer enables a person to vacate or transfer their legal ownership of the property. However, in the deed of relinquishment, the transferred property is always hereditary, and the gifted asset is not necessarily hereditary. The person to whom the property is relinquished must be the co-owner of the property. In the case of a gifted property, anyone can do so by giving explicit favour to the property itself.
FORMAT OF A GIFT DEED: SAMPLE
On a voluntary basis, gift deeds are an effective legal tool for the smooth transfer of property in India. It also comes with Tax exemption within certain limits. In addition, it is exempt from sales tax and central tax. The main takeaway is that it is autonomous and does not mean any monetary reward; however, it should be noted that additional stamp duty on a gift deed , which may vary from state to state.
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Frequently Asked Questions (FAQs)
What are the main things recorded for a gift deed.
It should primarily state that the donor is gifting voluntarily, and there is no external/internal influence or coercion for the same. The acceptance of the gift should also be mentioned
How to fix an appointment at the Sub-Registrar’s office?
Visit the official website of the state government and go to the Revenue Department. From there, select the district name, SRO address, area details where the gift deed is located. In the receipt, fill the e-stamp number. Fix an appointment with the SRO where an SMS alert will confirm the same.
Can a gift deed be revoked?
Under very special circumstances, but there’s no guarantee.
Can an NGO pay stamp duty if it was part of a gift deed?
Any charity centres do not fall under the purview of stamp duty; however, state authorities should be consulted on the matter. In most cases, an NGO cannot be acquired as part of the gift deed.
What are the names of the recipients of a gift deed?
They are usually called Donor and Donee. The Donor transfers the property, and the donee can be anyone, their relation will determine the amount of stamp duty on gift deed and other fees to be paid
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Know everything about gift deeds and their format
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Describe a gift deed.
Gift deed registration .
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- Transfer of Property Act
Concept of gift under the Transfer of Property Act, 1882
This article is written by Ananya Garg , from Chanakya National Law University, and Bhuvan Malhotra, final year student at Jindal Global Law School . It discusses the legal provisions relating to ‘Gifts’ u nder Chapter VII of the Transfer of Property Act.
Table of Contents
A Gift is generally regarded as a transfer of ownership of a property where the sender willingly brings into effect such transfer without any compensation or consideration in monetary value. It may be in the form of moveable or immoveable property and the parties may be two living persons or the transfer may take place only after the death of the transferor. When the transfer takes place between two living people it is called inter vivos, and when it takes place after the death of the transferor it is known as testamentary. Testamentary transfers do not fall under the scope of Section 5 of the Transfer of Property Act , and thus, only inter vivos transfers are referred to as gifts under this Act.
If the essential elements of the gift are not implemented properly it may become revoked or void by law. There are many provisions pertaining to the gifts. All such provisions, for example, types of property which may be gifted, modes of making such gift, competent transferor, suspension and revocation of gift, etc. are discussed in this article.
What may be referred to as a gift
Section 122 of Transfer of Property Act defines a gift as the transfer of an existing moveable or immovable property. Such transfers must be made voluntarily and without consideration. The transferor is known as the donor and the transferee is called the donee. The gift must be accepted by the donee. This Section defines a gift as a gratuitous transfer of ownership in some property that is already existing. The definition includes the transfer of both immovable and moveable property.
Mt. Brij Devi v. Shiva Nanda Prasad & Ors (1939) : an analysis
One of the few essentials of a Gift is, that in event of a transfer, there must be a transference of all the rights in the property by the donor to the donee; however, it is also permissible to make conditional gifts. Such a clause is governed by Section 126 of the Act.
To delve into the issue, we must refer to the first important pre-independence judgment of the Allahabad High Court, where the subject matter of dispute is the same as our concern. In the case of Mt. Brij Devi v. Shiva Nanda Prasad & Ors (1939) Brij Devi had claimed possession of a land which had formed the focus of a gift deed executed by her ancestors on 11 th December 1914, in favor of one Jain Bulaqi Shankar. The gift deed was executed with some conditions attached to it which read as, “ The material terms of the gift-deed are as follows: I have made a gift to Pt. Jain Bulaqi Shankar for construction of the temple of Bhaironji, and residence, and removing my possession from the property gifted, I have put the donee in proprietary possession and he will have the right to construct a temple and a quarter… The donee or his successors will have no right to transfer or mortgage it; if he does, the transfer will be invalid, and I and my successors will have a right to get the gift revoked .” As per the gift deed, Jain Bulaqi did not succeed in building the temple or a residential quarter for his own occupation, but subsequently he made a waqf of the property in favour of one Shiva Nanda Prasad in 1927, which means, he transferred the property which had been gifted to him by the plaintiffs’ ancestor. This action of the done was alleged to be in contravention of the conditions of the gift deed itself. They alleged that in circumstances of property being alienated, by virtue of the revocation clause mentioned in the gift deed, they were entitled to declare the transfer done to the defendant as invalid and further have the right to take back the possession of the land as per the gift deed.
The defendants argued that the transfer made by way of gift deed, was an absolute transfer of the land to Jain Bulaqi, and that that transfer in the gift deed had been subject to a condition absolutely restraining the transferee and his successors from parting with or disposing of his interest in the property which is repugnant to the Transfer of Property Act itself. Section 10 of the Transfer of Property act states that, absolute restraint on the transferee by the transferor is void, that is, the condition restraining the alienation is void while the transfer of the property itself is valid. The defendants’ argument was essentially based on the foundation of Section 10 of TPA, they argued that such a restraint on the land was void and the contract must be allowed as if an unequivocal transfer of the land was made to the donee.
Moreover, because the condition was void, the transfers in favor of Shiva Nanda Prasad were valid and could not be set aside, nor were the plaintiffs entitled to revoke the gift deed. The plaintiffs then took the defense of Section 126 of the Transfer of Property Act and contested that the transfer was not void as per the mentioned section. The section essentially means that the donor and donee can agree upon happening of certain conditions, when the condition is not fulfilled, the gift can be revoked. The plaintiffs argued that the right to revoke the gift was contingent upon the alienation by the donee of the land gifted and not upon the will of the donor.
The plaintiffs supported this claim by citing the case of Makund Prasad v. Rajrup Singh (1907), in which the court held that a gift of property made on the condition that the land would be liable to be taken back in the event of its Alienation, was valid and the power of revocation was not repugnant to the original transfer under Section 10.
The court in this case rightfully upheld the defendants claim and ruled that the gift deed cannot be revoked by the successors of the ancestor who had made the gift deed in favour of Jain Bulaqi as the transfer was uncosniable in the first place as it restricted the donee completely to alienate such property. This was the first major judgment which rightfully upheld the donee’s claim and rightfully interpreted the law relating to sections 10 and 126, however the thing to note in this judgment was the lower appellant court had ruled in favour of the plaintiffs and the high court had overturned the decision which is a usual trend which we see in cases relating to the issue of our paper. Even after such a judgment, we see cases relating to the same issue where the lower and high court’s decision is overturned in the Supreme Court. In the case of Sridhar vs N. Revanna (2000) , which is a case of February, 2020, out of the many issues in the suit, the same issue, that is, whether a gift deed can be revoked by virtue of Section 126 if such property is alienated had been raised in the Supreme Court once again for which the court had to adjudicate the matter. In this case one Shri Muniswamappa, great grandfather of the plaintiffs and grandfather of defendant No.1, was the absolute owner of the suit schedule property who executed gift deeds in favour of the defendants with the same condition that the property should not be alienated and if such property was to be alienated, then the gift deed stands invalid. The defendants on the other hand had sold the property which they had received as a gift to which the plaintiffs’ alleged that such a transfer was invalid as the gift deed specifically stated that the mentioned property is not to be alienated and the plaintiffs demanded the property to be transferred to them back.
The High Court in this case too decided that the condition of the gift deed was not fulfilled and thus ruled that the sale made by the donee was invalid and the property is to be returned, but the Supreme court in this too cited the ruling held in the case of Mt. Brij Devi v. Shiva Nanda Prasad & Ors (1939) and overturned the High court’s decision and ruled that the gift deed cannot be revoked as at the very inception of the gift deed, the donee was completely restricted to alienate such property which is prohibited by Transfer of Property Act by virtue of section 10.
For an issue that has been a settled law as per the 1939 judgment of the Allahabad High Court, it is important to analyze what is making the courts interpret such laws in different manners and why are the higher courts being time and again invoked to settle such disputes. Firstly we would look at the way Section 126 is drafted in the Transfer of Property Act and also the placement of such a section would be beneficial for an in-depth analysis. Section 126 reads as: “ donor and donee may agree that on the happening of any specified event which does not depend on the will of the donor, a gift shall be suspended or revoked; but a gift which the parties agree shall be revocable wholly or in part, at the mere will of the donor, is void wholly or in part, as the case may be. ”
The section as it appears has a highly generic wording and allows the donor to make some condition while gifting it to the donee and if such condition is not fulfilled or abided by, the donor can revoke the gift deed not on the basis of his will but subject to the condition that remained unfulfilled or which has not been abided by. This section is type of a conditional clause as the gifts chapter starts from Section 122 of the Transfer of Property Act. Chapter 2 of the Act is a general chapter which puts some restrictions on the property while the gifts form a part of separate chapter, that is, ‘of Gifts’ in the Act. Moreover if we look at the illustrations present in the section, it appears that the law is silent upon such matters, that is, what if there is a complete restriction on the alienation of the property. The courts while adjudicating the matter look at the placement of these conditional clauses, where the presence of section 126, that is, the conditional clause is already present in the chapter, the courts tend to think that the gifts are to be governed only by the set conditions that have been made in the gift deed. Moreover, the courts also interpret that if such conditional clause is present in the chapter ‘of gifts’ hwere parties can make own conditions in the gift deed, there must be a legislative intent behind this structuring and the chapter ‘of gifts’ must be looked at aloof of other chapters, specifically Section 10 (to which our analysis is limited). The illustrations (Section 126), being silent on such conditions, also add to this mis-interpretation of the court. The first illustration provided in the section is contingent upon the death of B and his descendants but in the first place, the donee is not restricted from alienation of the property.
The second illustration provided also does not talk about the alienation issue rather it clarifies that if an amount of 100 is gifted to someone by the donor and with both the donor and donee’s assent, they agree that Rs 10 can be asked back at any time, this shows that the actual gift was of Rs 90 only as the donee has to return back the Rs 10 to the donor back, that is, that amount of Rs 10 is inalienable. The second illustration is somewhat related to the issue at hand but because it is talking about a movable gift, that is, in cash, the courts tend to think that this may be applicable to only movable gifts as we cannot gift land in such a way. Thus, due to the absence of such clarity in the issue, the court thinks that the act is silent in the issue at hand and they tend to give different rationale and rule that the property which forms center of a gift deed can be revoked if the condition of alienation is not abided by the donee.
This interpretation or perception of the courts is wrong as section 10 of the act is part of the chapter 2, that is, ‘of transfers of property by act of Parties’ which is a general section and must apply to all the chapters of the Act as it defines the ‘action’ of the parties per se which is void in the eyes of law. Needless to mention, Parties of any transaction are an essential element for a transaction to take place, thus a specific chapter has been created by the Act which gives some clarity of what all actions of the parties entering into the transaction are good or bad in law. If there was a legislative intent for a gift to be governed only by the conditions of the gift deed, that is, section 126 of the Transfer of Property Act and section 10 would not apple to such conditions, then such an exception would be specifically mentioned in the section 10 of the Act just like mortgage, which has been specifically excluded in the section 10 of the Act. Thus, reading into the issues where the act appears to be silent as section 126 and section 10 are a part of different chapters is the wrong approach that is often followed by the court which leads to wrong judgments time and again. The same logic of free market that is used to defend the creation of section 10 of the Act can also be extended to this issue as well. The main reason for which such a section, that is, section 10 was created was to not allow accumulation of the property. People in India hold a lot of sentimental value towers the land and property they own and subsequently the ancestors do not want their future generations to alienate such property.
To counter such problem, that is, a property does not start limiting to one family lineage; such a section was created and is still needed as exclusion of such a section would pull us back to the zamindari system as was prevalent in India as few years back. Moreover when a gift deed is revoked the government too is not benefitted from this transfer in terms of taxes. A gift deed in the first place when is executed, it does not attract any tax but there is a change in ownership as there is a change in title of the property and when such a gift deed will be revoked, there will be again a change in the title and ownership which would not attract any tax as the property which was owned by the donor at some time is being handed back to him by way of revocation, thus two transfers of title are made and the taxable amount is none on the property which is something not beneficial for a new democracy to progress. Moreover the legal maxim, “alienation rei praefertur juri accrescendi” meaning that Law favours Alienation instead of Accumulation can be extended to the issue at hand and by way of alienation of the gifted property, even the government could benefit from the amount of taxes that would be charged by way of transfer of such property to a third person.
Parties to a gift transfer
The donor must be a competent person, i.e., he must have the capacity as well as the right to make the gift. If the donor has the capacity to contract then he is deemed to have the capacity to make the gift. This implies that at the time of making a gift, the donor must be of the age of majority and must have a sound mind. Registered societies, firms, and institutions are referred to as juristic persons, and they are also competent to make gifts. Gift by a minor or insane person is void. Besides capacity, the donor must also have the right to make a gift. The right of the donor is determined by his ownership rights in the property at the time of the transfer because gift means the transfer of the ownership.
Donee does not need to be competent to contract. He may be any person in existence at the date of making the gift. A gift made to an insane person, or a minor, or even to a child existing in the mother’s womb is valid subject to its lawful acceptance by a competent person on his/her behalf. Juristic persons such as firms, institutions, or companies are deemed as competent donee and gift made to them is valid. However, the donee must be an ascertainable person. The gift made to the general public is void. If ascertainable, the donee may be two or more persons.
There are the following five essentials of a valid gift:
Transfer of ownership
Existing property, transfer without consideration, voluntary transfer with free consent.
- Acceptance of the gift
The transferor, i.e., the donor must divest himself of absolute interest in the property and vest it in the transferee, i.e., the donee. Transfer of absolute interests implies the transfer of all the rights and liabilities in respect of the property. To be able to effect such a transfer, the donor must have the right to ownership of the said property. Nothing less than ownership may be transferred by way of gift. However, like other transfers, the gift may also be made subject to certain conditions.
The property, which is the subject matter of the gift may be of any kind, movable, immovable, tangible, or intangible, but it must be in existence at the time of making a gift, and it must be transferable within the meaning of Section 5 of the Transfer of Property Act.
Gift of any kind of future property is deemed void. And the gift of spes successionis (expectation of succession) or mere chance of inheriting property or mere right to sue, is also void.
A gift must be gratuitous, i.e., the ownership in the property must be transferred without any consideration. Even a negligible property or a very small sum of money given by the transferee in consideration for the transfer of a very big property would make the transaction either a sale or an exchange. Consideration, for the purpose of this section, shall have the same meaning as given in Section 2(d) of the Indian Contract Act . The consideration is pecuniary in nature, i.e., in monetary terms. Mutual love and affection is not pecuniary consideration and thus, property transferred in consideration of love and affection is a transfer without consideration and hence a gift. A transfer of property made in consideration for the ‘services’ rendered by the donee is a gift. But, a property transferred in consideration of donee undertaking the liability of the donor is not gratuitous, therefore, it is not a gift because liabilities evolve pecuniary obligations.
The donor must make the gift voluntarily, i.e., in the exercise of his own free will and his consent as is a free consent. Free consent is when the donor has the complete freedom to make the gift without any force, fraud coercion, and undue influence. Donor’s will in executing the deed of the gift must be free and independent. Voluntary act on a donor’s part also means that he/she has executed the gift deed in full knowledge of the circumstances and nature of the transaction. The burden of proving that the gift was made voluntarily with the free consent of the donor lies on the donee.
Acceptance of gift
The donee must accept the gift. Property cannot be given to a person, even in gift, against his/her consent. The donee may refuse the gift as in cases of non-beneficial property or onerous gift. Onerous gifts are such where the burden or liability exceeds the actual market value of the subject matter. Thus, acceptance of the gift is necessary. Such acceptance may be either express or implied. Implied acceptance may be inferred from the conduct of the donee and the surrounding circumstances. When the donee takes possession of the property or of the title deeds, there is acceptance of the gift. Where the property is on lease, acceptance may be inferred upon the acceptance of the right to collect rents. However, when the property is jointly enjoyed by the donor and donee, mere possession cannot be treated as evidence of acceptance. When the gift is not onerous, even minimal evidence is sufficient to prove that the gift has been accepted by donee. Mere silence of the donee is indicative of the acceptance provided it can be established that the donee had knowledge of the gift being made in his favour.
Where the deed of gift categorically stated that the property had been handed over to the donee and he had accepted the same and the document is registered, a presumption arises that the executants are aware of what was stated in the deed and also of its correctness. When such presumption is coupled with the recital in the deed that the donee had been put in possession of the property, the onus of disproving the presumption would be on the donor and not the donee.
Where the donee is incompetent to contract, e.g., minor or insane, the gift must be accepted on his behalf by a competent person. The gift may be accepted by a guardian on behalf of his ward or by a parent on behalf of their child. In such a case, the minor, on attaining majority, may reject the gift.
Where the donee is a juristic person, the gift must be accepted by a competent authority representing such legal person. Where the gift is made to a deity, it may be accepted by its agent, i.e., the priest or manager of the temple.
Section 122 provides that the acceptance must be made during the lifetime of the donor and while he is still capable of giving. The acceptance that comes after the death or incompetence of the donor is no acceptance. If the gift is accepted during the life of the donor but the donor dies before the registration and other formalities, the gift is deemed to have been accepted and the gift is valid.
Modes of making a gift
Section 123 of the Transfer of Property Act deals with the formalities necessary for the completion of a gift. The gift is enforceable by law only when these formalities are observed. This Section lays down two modes for effecting a gift depending upon the nature of the property. For the gift of immovable property, registration is necessary. In case the property is movable, it may be transferred by the delivery of possession. Mode of transfer of various types of properties are discussed below:
In the case of immovable property, registration of the transfer is necessary irrespective of the value of the property. Registration of a document including gift-deed implies that the transaction is in writing, signed by the executant (donor), attested by two competent persons and duly stamped before the registration formalities are officially completed. In the case of Gomtibai v. Mattulal , it was held by the Supreme Court that in the absence of written instrument executed by the donor, attestation by two witnesses, registration of the instrument and acceptance thereof by the donee, the gift of immovable property is incomplete.
The doctrine of part performance is not applicable to gifts, therefore all the conditions must be complied with. A donee who takes possession of the land under unregistered gift-deed cannot defend his possession on being evicted. The following must be kept in mind regarding the requirement of registration:
- Registration of the gift of immovable property is must, however, the gift is not suspended till registration. A gift may be registered and made enforceable by law even after the death of the donor, provided that the essential elements of the gift are all present.
- In case the essential elements of a valid gift are not present, the registration shall not validate the gift.
It has been observed by the courts that under the provisions of the Transfer of Property Act, Section 123, there is no requirement for delivery of possession in case of an immovable gift. The same has been held in the case of Renikuntla Rajamma v. K. Sarwanamma that the mere fact that the donor retained the right to use the property during her lifetime did not affect the transfer of ownership of the property from herself to the donee as the gift was registered and accepted by the donee.
In the case of movable properties, it may be completed by the delivery of possession. Registration in such cases is optional. The gift of a movable property effected by delivery of possession is valid, irrespective of the valuation of the property. The mode of delivering the property depends upon the nature of the property. The only things necessary are the transfer of the title and possession in favour of the donee. Anything which the parties agree to consider as delivery may be done to deliver the goods or which has the effect of putting the property in the possession of the transferee may be considered as a delivery.
Actionable claims are defined under Section 3 of the Transfer of Property Act. It may be unsecured money debts or right to claim movables not in possession of the claimant. Actionable claims are beneficial interests in movable. They are thus intangible movable properties. Transfer of actionable claims comes under the purview of Section 130 of the Act. Actionable claims may be transferred as gift by an instrument in writing signed by the transferor or his duly authorised agent. Registration and delivery of possession are not necessary.
A gift of future property
Gift of future property is merely a promise which is unenforceable by law. Thus, Section 124 of the Transfer of Property Act renders the gift of future property void. If a gift is made which consists of both present as well as future property, i.e., one of the properties is in existence at the time of making the gift and the other is not, the whole gift is not considered void. Only the part relating to the future property is considered void. Gift of future income of a property before it had accrued would also be void under Section 124.
A gift made to more than one donee
Section 125 of the Act says that in case a property is gifted to more than one donee, one of whom does not accept it, the gift, to the extent of the interest which he would have taken becomes void. Such interest reverts to the transferor and does not go to the other donee.
A gift made to two donees jointly with the right of survivorship is valid, and upon the death of one, the surviving donee takes the whole.
Provisions relating to onerous gifts
Onerous gifts refer to the gifts which are a liability rather than an asset. The word ‘onerous’ means burdened. Thus, where the liabilities on a property exceed the benefits of such property it is known as an onerous property. When the gift of such a property is made it is known as an onerous gift, i.e., a non-beneficial gift. The donee has the right to reject such gifts.
Section 127 provides that if a single gift consisting several properties, one of which is an onerous property, is made to a person then that person does not have the liberty to reject the onerous part and accept the other property. This rule is based upon the principle of “ qui sentit commodum sentire debet et onus ” which implies that the one who accepts the benefit of a transaction must also accept the burden of it. Thus, when two properties, one onerous and other prosperous, are given in gift to a donee in the same transaction, the donee is put under the duty to elect. He may accept the gift together with the onerous property or reject it totally. If he elects to accept the beneficial part of the gift, he is bound to accept the other which is burdensome. However, an essential element of this Section is a single transfer. Both the onerous and prosperous properties must be transferred in one single transaction only then they require the obligation to be accepted or rejected in a joint manner.
In case the onerous gift is made to a minor and such donee accepts the gift, he retains the right to repudiate the gift on attaining the age of majority. He may accept or reject the gift on attaining majority and the donor cannot reclaim the gift unless the donee rejects it on becoming a major.
The concept of universal donee is not recognised under English law, although universal succession, according to English law is possible in the event of the death or bankruptcy of a person. Hindu law recognises this concept in the form of ‘ sanyasi’, a way of life where people renounce all their worldly possessions and take up spiritual life. A universal donee is a person who gets all the properties of the donor under a gift. Such properties include movables as well as immovables. Section 128 lays down in this regard that the donee is liable for all the debts and liabilities of the donor due at the time of the gift. This section incorporates an equitable principle that one who gets certain benefits under a transaction must also bear the burden therein. However, the donee’s liabilities are limited to the extent of the property received by him as a gift. If the liabilities and debts exceed the market value of the whole property, the universal donee is not liable for the excess part of it. This provision protects the interests of the creditor and makes sure that they are able to chase the property of the donor if he owes them.
Suspension or revocation of gifts
Section 126 of the Act provides the legal provisions which must be followed in case of a conditional gift. The donor may make a gift subject to certain conditions of it being suspended or revoked and these conditions must adhere to the provisions of Section 126. This Section lays down two modes of revocation of gifts and a gift may only be revoked on these grounds.
Revocation by mutual agreement
Where the donor and the donee mutually agree that the gift shall be suspended or revoked upon the happening of an event not dependent on the will of the donor, it is called a gift subject to a condition laid down by mutual agreement. It must consist of the following essentials:
- The condition must be expressly laid down
- The condition must be a part of the same transaction, it may be laid down either in the gift-deed itself or in a separate document being a part of the same transaction.
- The condition upon which a gift is to be revoked must not depend solely on the will of the donor.
- Such condition must be valid under the provisions of law given for conditional transfers. For eg. a condition totally prohibiting the alienation of a property is void under Section 10 of the Transfer of Property Act.
- The condition must be mutually agreed upon by the donor and the donee.
- Gift revocable at the will of the donor is void even if such condition is mutually agreed upon.
Revocation by the rescission of the contract
Gift is a transfer, it is thus preceded by a contract for such transfer. This contract may either be express or implied. If the preceding contract is rescinded then there is no question of the subsequent transfer to take place. Thus, under Section 126, a gift can be revoked on any grounds on which its contract may be rescinded. For example, Section 19 of the Indian Contract Act makes a contract voidable at the option of the party whose consent has been obtained forcefully, by coercion, undue influence, misrepresentation, or fraud. Thus, if a gift is not made voluntarily, i.e., the consent of the donor is obtained by fraud, misrepresentation, undue influence, or force, the gift may be rescinded by the donor.
The option of such revocation lies with the donor and cannot be transferred, but the legal heirs of the donor may sue for revocation of such contract after the death of the donor.
The limitation for revoking a gift on the grounds of fraud, misrepresentation, etc, is three years from the date on which such facts come to the knowledge of the plaintiff (donor).
The right to revoke the gift on the abovementioned grounds is lost when the donor ratifies the gift either expressly or by his conduct.
The last paragraph of Section 126 of the Act protects the right of a bonafide purchaser. A bonafide purchaser is a person who has purchased the gifted property in good faith and with consideration. When such a purchaser is unfamiliar with the condition attached to the property which was a subject of a conditional gift then no provision of revocation or suspension of such gift shall apply.
Section 129 of the Act provides the gifts which are treated as exceptions to the whole chapter of gifts under the Act. These are:
Donations mortis causa
These are gifts made in contemplation of death.
Muslim-gifts ( Hiba)
These are governed by the rules of Muslim Personal Law. The only essential requirements are declaration, acceptance and delivery of possession. Registration is not necessary irrespective of the value of the gift. In case of a gift of immovable property worth more than Rupees 100, Registration under Section 17 of the Indian Registration Act is must, as it is applicable to Muslims as well. For a gift to be Hiba only the donor is required to be Muslim, the religion of the donee is irrelevant.
To constitute a transfer as a gift it must follow the provisions of the Transfer of Property Act. This Act extensively defines the gift itself and the circumstances of the transfer of such a gift. The gift, being a transfer of the ownership rights, must be in possession and ownership of the transferee and must be existing at the time of making the transfer. The transferor must be competent to make such transfer but the transferee may be any person. In case the transferee is incompetent to contract, the acceptance of gift must be ratified by a competent person on his/her behalf. Gift of future property is void. Partial acceptance of prosperous gifts and rejection of onerous gifts is not valid either. The acceptance of a gift entails the acceptance of the benefits as well as the liabilities coupled with such a gift. A gift may be revoked only by a mutual agreement on a condition by the donor and the donee, or by rescinding the contract pertaining to such gift. The Donations mortis causa and Hiba are the only two kinds of gifts which do not follow the provisions of the Transfer of Property Act.
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The gift tax is a tax on the transfer of property by one individual to another while receiving nothing, or less than full value, in return. The tax applies whether or not the donor intends the transfer to be a gift.
The gift tax applies to the transfer by gift of any type of property. You make a gift if you give property (including money), or the use of or income from property, without expecting to receive something of at least equal value in return. If you sell something at less than its full value or if you make an interest-free or reduced-interest loan, you may be making a gift.
For additional information, review Form 709 and its instructions .
Related international topics, publications.
- Property Law
Gift under The Transfer of Property Act
- July 6, 2020
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Prachurya Sahu | Symbiosis Law School, Pune
Table of Contents
The Transfer of Property Act, 1882 governs 5 different types of transactions within the meaning of a “transfer”, namely sale, mortgage, lease, exchange and gift. In general, a gift is an item which is willingly given to someone without any payment or thing in return. In law, gift is considered a gratuitous transfer, i.e. one for which there is no mutual consideration.
Gift is dealt with under Section 122 of the Transfer of Property Act. It defines gift as “…the transfer of certain existing moveable or immoveable property made voluntarily and without consideration, by one person, called the donor, to another, called the donee, and accepted by or on behalf of the donee. Such acceptance must be made during the lifetime of the donor and while he is still capable of giving, If the donee dies before acceptance, the gift is void.”
Therefore, in the process of gift, an existing property is transferred in favour of another person unilaterally without any consideration. Furthermore, as evident from the wording of the legislation, the Section is applicable to only inter vivos gift i.e. a gift between living persons. It doesn’t deal with inheritance or gifts mortis causa.
- Transfer of existing movable or immovable property
- Voluntary transfer and without consideration
- Existence of donor and done
- Valid acceptance by or on behalf of the done
Transfer of property
For a valid gift, there must be transfer of property including movable or immovable property. The person transferring the interest is called the “donor” while the one accepting it is called the “donee.” A bequest under a will not be considered a transfer.  However, conditional transfers/gifts are permitted as long as such conditions are not repugnant to any of the provisions of the Act.
A deed of relinquishment will be considered a gift. For example, relinquishment of share by a tenant-in-common is favour of other amounts to a gift.  or a dan  (religious charity) would all be considered gifts and governed by the TPA.
Property must be in existence.
Section 124 deals with gifts of future property. It lays down that “ A gift comprising of both existing and future property is void as to the latter.”
This means the property to be gifted must be in existence at the time of making the gift, even if its transfer may be effected in the present of the future. Therefore, a gift of future property is void.  The main reasoning behind it is that a gift of future property is merely a promise, and any promise unsupported by consideration is invalid as a contract. 
Voluntary Transfer without Consideration
The whole purpose of a gift is gratuitous transfer. The word “voluntarily” denotes unfettered will. This voluntary nature as well as the lack of consideration or its contemplation is the key aspect of a gift.
For a gift deed to be valid, the intention of the executer must be clear with evidence supporting it.  It must be shown that during the physical act of signing the deed, there was a coinciding animus or mental act (i.e. the intention to execute the gift).  Furthermore, the principles present in the Indian Contract Act, 1872 relating to free consent apply in the consideration of voluntary nature of the gift.  Parties pleading fraud, undue influence or coercion carry the burden of proving that there was no free consent rather than the donee who accepts the gift. External factors such as old age  , intimacy  etc do not allow for assumption of undue influence.
The word “consideration” is applied in the same sense as in the Indian Contract Act, 1872 and therefore excludes natural love and affection. Any transfer which has been made in exchange for a consideration of spiritual and moral benefit or love and affection, therefore is a gift. 
For a gift transfer to be complete, it must be accepted by the donee or on behalf of him/her. The words “on behalf” allows for gifts to be made for people who may not be able to convey acceptance or who are not competent to contract. Therefore, a minor  as well as a unborn child can be a donee, with another person accepting it on his behalf.
Furthermore, acceptance may be express or inferred.  Such inference may be derived from the donee’s possession of the property as well as oral evidence to show that the gift had been acted upon.  At times, silence may also be taken to indicate acceptance, as long as it is settled that the done knew of the gift.
Method of Transfer
According to Section 123 of the TPA, “ For the purpose of making a gift of immoveable property, the transfer must be effected by a registered instrument signed by or on behalf of the donor, and attested by at least two witnesses. For the purpose of making a gift of moveable property, the transfer may be effected either by a registered instrument signed as aforesaid or by delivery.”
Therefore, while for the transfer of movable property, a registered instrument is not necessary, for transfer of immovable property, it is mandatory without consideration for the value of the property. Mere delivery of possession does not confer possession in case of immovable property as laid down in Wing Commander R.N. Dawar v. Shri Ganga. 
Usually gifts are unilateral and such a transfer is said to be complete as soon as there is valid acceptance by the donee. Onerous gifts are those which are accompanied with a burden or obligation. It is derivative of the maxim qui sentit commodum, debetet et sentire onus which means he who derives a benefit ought also to bear a burden.
Section 127 of the Act governs onerous gifts and embodies the above maxim. It lays down that “where a gift is in the form of a single transfer to the same person of several things of which one is, and the others are not, burdened by an obligation, the done can take nothing by the gift unless he accepts it fully.”
This means to say that either a person must accept the whole gift along with whatever obligation attached to it, or decline the gift in its entirety. A person cannot partially accept only the gifts which are beneficial while refusing the ones which place a burden on him.
Further Section 127 also lays down that “a donee not competent to contract and accepting property burdened by any obligation is not bound by his acceptance. But if, after becoming competent to contract and being aware of the obligation, he retains the property given, he becomes so bound.”
Section 127 is interpreted to refer to minor done by the Supreme Court. It lays down that in cases where an onerous gift is accepted by a minor, subsequent to his attaining majority, if he assents to be bound by such a gift, he will be bound by the obligation attached to it. 
Revocation of Gifts
A gift which has already been executed by the donor, accepted by the donee and registered by the registering authority if need be, usually cannot be revoked. However, there are certain conditions in which a gift deed can be revoked if certain mandatory requirements are met.  These conditions are laid down in Section 126 of the Transfer of Property Act: –
“The donor and donee may agree that on the happening of any specified event which does not depend on the will of the donor a gift shall be suspended or revoked; but a gift which the parties agree shall be revocable wholly or in part, at the mere will of the donor, is void wholly or in part, as the case may be.
A gift may also be revoked in any of the cases (save want or failure of consideration) in which, if it were a contract, it might be rescinded.
Save as aforesaid, a gift cannot be revoked.”
Therefore, the only cases where revocation is possible is when the parties have mutually agreed for suspension of gift  or when the gift deed is executed in the absence of free consent due operation of fraud or undue influence. 
Revocation in the first case, depends on the mutual agreement between the doner and the donee on a condition subsequent which would be grounds for cancellation of the gift. Such a condition must be made at the time of making the gift and not after the gift has become absolute. Once a gift has become absolute, the only other method of cancellation of such gift is if the doner can prove before a court of law that such a gift was made without free consent.
 N Ramaiah v Nagaraj, AIR 2001 Kant. 395
 State of Uttar Pradesh v Shanti, AIR 1979 All 305)
 Debi Sharan v Nanlal Chaubey, AIR 1929 Pat. 591
 Brindabini Behari v Oudh Behari, AIR 1947 All 179 .
 Section 25, Indian Contract Act, 1872
 Vathsala Manickavasagam v N Ganesan, (2013) 9 SCC 152
 R Kuppayye v Raja Gounder, AIR 2004 SC 1248
 Subhas Chandra v Ganga Prosad, AIR 1967 SC 878
 Roshan Lal v Kartar Chand, AIR 2002 HP 131
 Subhash Chandra Das Mushib v Ganga Prosad Das Mushib, AIR 1967 SC 878
 Tulsidas Kilachand v CIT, AIR 1961 SC 1023
 K Balakrishnan v K Kamalam, AIR 2004 SC 1257
 Shakuntla Devi v Amar Devi, AIR, 1985 HP 109, p 111.
 Gauranga Sahu v Maguni Dev, AIR 1991 Ori. 151, p 155.
 Wing Commander R.N. Dawar v. Shri Ganga, AIR 1993 Del 19
 K Balakrishnan v K Kamalam, AIR 2004 SC 1257
 Kamalakanta Mohapatra v Pratap Chandra Mohapatra, AIR 2010 Ori. 13
 Garagaboyina Radhakrishna v District Registrar, Vishakhapatnam, AIR 2012 AP 190
 Balai Chandra Parui v Durga Bala Dasi, AIR 2004 Cal 276
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Home » Must Knows » Legal » Everything you need to know about gift deed
Everything you need to know about gift deed
A gift of property, involves conferring the ownership of one’s property on to another, through a gift deed. Gifting a property through a gift deed to a near and dear one, has certain monetary implications that you should consider first.
Table of Contents
What is a gift deed?
A gift deed is an agreement that is used, when a person wishes to gift his property or money to someone else. A moveable or immovable property can be gifted voluntarily using gift deed, from the donor to the donee. A gift deed allows the property owner to gift the property to anyone and avoids any future dispute arising out of succession or inheritance claims . A registered gift deed is also evidence in itself and unlike in the case of a will, the transfer of property is instant and you will not be required to go to the court of law for execution of gift deed and hence, deed of gift also saves time.
See also: What is a title deed ?
Gift deed: What gifts have to be in a gift deed format?
A movable property, or immovable property, or an existing property that is transferable, can be gifted and require a gift deed. Having a registered gift deed, will help you avoid any litigation that comes up thereafter.
See also: Coparcener meaning in HUF context
Gift deed: How to draft it?
Draft of a gift deed must include the following details:
- Place and date on which the gift deed is to be executed.
- Relevant information on gift deed regarding the donor and the donee, such as their names, address, relationship, date of birth and signatures.
- Complete details about the property for which you draft a gift deed.
- Two witnesses to bear testimony of the gift deed and their signatures.
Thereafter, depending on the value determined by the state government, the gift deed must be printed on stamp paper after paying the required amount and the gift deed should be registered at the registrar or sub-registrar’s office.
See also: Partnership deed must be stamped as required by Indian Stamps Act
Gift deed: Important clauses to mention
Here are some important things that should be mentioned in the gift deed format.
There’s no money or force involved
Make sure that you add this consideration clause to the gift deed. It must be indicated that there is no exchange of money and that the gift deed is made solely out of love and affection and not due to money or coercion.
You are the owner of your property when you gift
Only the owner can gift a property. If you are not the owner (title holder) of the property, you cannot give a property as gift deed it to someone else, even in anticipation.
Describe the property
All information pertaining to the property, such as the structure, type of property, address, area, location, etc., must be mentioned in the property gift deed format.
Relationship between the donor and the donee
If the donor and donee are blood relatives, some state governments may offer a concession on stamp duty. Even otherwise, it is important to establish the relationship between the donor and done in the property gift deed format.
If there are rights or liabilities attached to the gift, such as whether the donee can sell or lease the property, etc., such clauses should be mentioned in the gift deed.
This on the gift deed mentions the expressed or implied action of delivery of possession of the property.
Revocation of the gift
The donor can also mention clearly if he/she wants a revocation clause to be adhered to the gift deed by the donee. Both, the donor and donee, must agree on this gift deed clause.
See also: What is conveyance deed meaning
Sample format of a gift deed
Documents required for gift deed registration
Apart from the aforementioned documents, you will need to produce the original gift deed, as well as ID proof, PAN card, Aadhaar card, the sale deed of the property, as well as other documents pertaining to other agreements regarding this property.
Charges for gift deed registration
For gift deed registration, you will be required to pay the stamp duty, which varies from state to state. You can also pay the stamp duty online or at the registrar’s office.
See also: Partition deed : Everything you need to know
Gift deed: Should you pay stamp duty for gift of property to an NGO?
In usual cases, gifting a property to an NGO or charity centre does not incur any stamp duty. However, you must check with your state authority, regarding the rules. Also, in many cases, NGOs may not be allowed to accept property as a gift. It is advisable that you hire the services of an advocate, to find this out.
Can I revoke a gift deed?
After the property has been gifted, lawfully, it becomes the donee’s and cannot be revoked easily. However, according to Section 126 of the Transfer of Property Act, 1882, revoking of a gift deed may be allowed under certain circumstances:
- If the gift deed was made due to coercion or fraud.
- If it is determined that the grounds of gift deed were immoral, illegitimate or reprehensible.
- If it was agreed upon from the beginning that the gift deed is revocable under certain circumstances.
In such cases, even in the event of the death of the donor, his legal heirs can go ahead with the gift deed revocation.
See also: Can gift deed be revoked
Income tax on gift deed
Gift deed have to be declared in the Income Tax Returns (ITR). In 1998, the Gift Tax Act of 1958 was abolished, only to be reintroduced in 2004. Therefore, in case you have been gifted an immovable property as a gift deed, you will have to pay tax, if its stamp duty value exceeds Rs 50,000 and if the property is received without necessary consideration. For example, if the consideration is Rs 1.5 lakhs while the stamp duty was Rs 4 lakhs, the difference between the two exceeds Rs 50,000.
Tax exemption for gift deed
If the property has been received from any of the following, then, the above clause shall not apply and the donee will not be taxed:
- If gift deed received from relatives by an individual and from a member by a HUF.
- If gift deed received on the occasion of the marriage of the individual .
- If gift deed received under a will or by way of inheritance.
- If gift deed received in contemplation of death of the payer or donor.
- If gift deed received from a local authority (as defined in Explanation to Section 10(20) of the Income-tax Act).
- If gift deed received from any fund, foundation, university, other educational institution, hospital or other medical institution, any trust or institution referred to in Section 10(23C).
- If gift deed received from a trust or institution registered under Section 12AA.
Gift deed versus will
Also know all about release deed
Can a property be gifted to a minor?
In case the property as a gift deed is being gifted to a minor, his/her legal guardian must accept it on the minor’s behalf. The minor may also accept or return the gift if he/she chooses to do so, after attaining the legal age.
Will I have to pay something in return for the property I receive as gift?
No, a gift is a gift by all means. The only charges paid by the donor, is the stamp duty and registration charges and other nominal charges that crop up because of legalities attached to gift deed. However, if the value of property/gift exceeds Rs 50,000, you may have to show it in your ITR depending, upon whom you received it from.
Can a property received as a gift be sold?
If there were no conditions attached to your gift deed and provided you have a registered the gift deed, you can sell the property.
Will the donee be liable to pay dues on the gifted property?
Yes, the donee becomes the legal owner and will then need to pay all dues and charges, such as electricity and maintenance charges, municipal taxes, etc. while giving the gift deed.
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Each grantor must sign the deed in the presence of a notary public for a valid transfer. All signatures must be original. In California, when real property is conveyed as a gift, no transfer tax is due, pursuant to Cal. R&T Code 11930. This exemption should be indicated on the first page of the instrument. Record the completed deed, along with ...
The Components of a Gift Deed. Your effective gift deed must have several traits and components: It is created to make an immediate transfer of the owner’s interest in the property, and an actual delivery of the property. By the deed’s explicit declaration, no consideration is necessary or expected. The deed is signed by the grantor (giver).
The transfer of property to someone can be paid or given for free. When ownership transfer has nothing to do with currency transactions, this transfer is called a gift deed. The registration of a gift deed does not require any financial reward; however, the entire legal process will be followed for acquiring it.
Under the Transfer of Property Act, a gift deed The Transfer of Property Act, 1882 governs gift deeds. According to the Act, the Gift must be offered voluntarily and without expectation of payment. In addition, the Donee must accept the Gift during the Donor's lifetime.
Section 122 of Transfer of Property Act defines a gift as the transfer of an existing moveable or immovable property. Such transfers must be made voluntarily and without consideration. The transferor is known as the donor and the transferee is called the donee. The gift must be accepted by the donee.
The gift tax is a tax on the transfer of property by one individual to another while receiving nothing, or less than full value, in return. The tax applies whether or not the donor intends the transfer to be a gift. The gift tax applies to the transfer by gift of any type of property.
The Transfer of Property Act, 1882 governs 5 different types of transactions within the meaning of a “transfer”, namely sale, mortgage, lease, exchange and gift. In general, a gift is an item which is willingly given to someone without any payment or thing in return.
A gift deed allows a property owner to voluntarily give his/her property to anyone and avoids any future dispute arising out of succession or inheritance claims A gift of property, involves conferring the ownership of one’s property on to another, through a gift deed.