Property is an immovable asset that can be used over a long time, unlike other assets like vehicles which come with certain years of utility. Property can also be transferred to anyone you wish, it could be one of your blood relations, friends, or even charity, in line with the common rules of succession.
There are charges and formalities involved whenever there is a transfer of property. So, how can you transfer property? Well, there are two options- through a gift deed or will. Through this post, we explore which of the option is better.
To begin with, let us start with the salient features of both the ways of property transfer.
You can gift your self-acquired property to anyone, as long as you are eligible to enter into a contract as per existing law of the country.
- The Donee needs to accept your gift.
- A gift deed is not compulsory to be drawn up but brings in transparency.
- 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.
- In case of a gift made to non-relatives over Rs 50,000, the recipient will have to pay taxes on the gift received. (It is good to check individual state rules for more clarity)
- A gift once made is irrevocable.
- Gifting can be used as a mode of transferring property during the lifetime of an individual.
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.
- Registration of the will is not mandatory but may be done to avoid litigations at a later date.
- The recipient of the property through a will is not bound to pay any taxes.
- After the death of an individual, the property passes on to the successor even in the absence of a will, as per laws of succession of the country.
- A will can be revoked or replaced any number of times during the lifetime of the person drawing it up.
Which one of the two is better?
Now that we have known the basic features of both the methods of property transfer, let us look at which one of the two is better. Both ways have their advantages and disadvantages.
Transfer through a gift deed is better when the need to transfer is on an immediate basis, whereas if an individual wants the property to move on to his /her successors only after his/her death, then writing a will may be the best way out.
Also, if the transfer is meant for people other than relatives, then writing out a will seems to be better bet from the financial perspective. However, the time of transfer also would matter.
The real answer to this question would lie in the reason behind transferring the property. Whatever be your need, we would advise you to exercise caution and follow all rules and regulations before doing a property transfer.