Property ownership in India can be transferred through different methods. From a simple sale to a gift deed to a relinquishment deed, options vary from situation to situation. In this post, we take a look at the top five ways in which one can transfer property ownership in India.
Sale Deed
The most common way of property transfer is through a sale deed. A person sells a property to another person, and then a sale deed is executed between the two parties. Once the sale deed is enlisted in sub-registrar office, the ownership gets transferred to the new owner.
However, if the seller is making any profit, he will have to pay the capital gains tax. The holding period considered for such sale is not the date of inheritance but the actual date of purchase of the property.
Thus, despite being the most common and straightforward method, it is not really a cost-effective way of transferring a property.
Gift Deed
Another popular way of transferring property ownership is by ‘gifting’ the property using a gift deed. As per Section 122 of the Transfer of Property Act, 1882, gifting a property must be done voluntarily.
When compared to a sale deed, it is a better method as there are no taxes to be paid if the gift is made to relatives. However, stamp duty and registration charges will have to be paid to make the transfer legal. Also, this kind of transfer is irrevocable. In case of a gift made to non-relatives over Rs 50,000, the recipient will have to pay taxes on the gift received.
Relinquishment Deed
The above-mentioned ways work only when the property in question has a single owner. So, what happens when a property has multiple owners? And one of the owners wants to transfer their share to another owner? Such transfers happen through relinquishment deed.
Relinquishment is the surrender of one’s ownership rights in favour of a co-owner. The stamp duty is applicable only on the portion that is relinquished and not on the full property value.
Much like a gift deed, such transfer is also irrevocable.
Will
Transfer of property can be made through a will too. However, this will take place only after the lifetime of the individual drawing up the will. The recipient of the property through a will is not bound to pay any taxes. A will can be revoked or replaced any number of times during the lifetime of the person drawing it up.
After the death of an individual, the successor needs to apply to the concerned civil authorities with the copy of the will, succession certificate, and death certificate for completing the property transfer process.
Partition Deed
Partition deed is another way of transferring property ownership from one person to another. It can be used in case of jointly-owned properties. However, this is executed to divide the property so that each person’s share is clearly defined.
It needs to be registered to be effective.
There is also another way of property transfer and that is by way of a Settlement Deed. This is for settlement within family members. One advantage is the stamp duty involved is 1% with a maximum of Rs. 25000/- in Tamil Nadu.