Property, both movable and immovable, can be transferred from one person to another in many ways. It can be transferred through a Will upon death through a Will deed, sold in exchange for consideration through a Sale deed, or transferred gratuitously through a Gift deed. A Gift deed is used to transfer property as a gift and is the legal instrument that is to be used when gifting a house. Gifting a house requires Gift deed drafting, payment of stamp duty, and registration of the deed.
Contents of the deed for gifting a house
Gifting a house through a Gift deed requires the following information to be in the deed:
- Details of the donor and donee: The deed outlines the details of the parties involved in the transaction. The names, ages and addresses of the parties are recorded in the deed. It also specifies the relationship between the person who is gifting a house, and the person receiving it.
- Details of property: The deed meticulously states all relevant information about the property being gifted. It outlines information like the address, structure, colour, location, surrounding and place of the property.
- Consideration: The consideration clause specifies that the gift is being given unconditionally, in the absence of any consideration. A Gift deed is a gratuitous form of exchange, which means there is no consideration of any form and the title to the property is transferred out of love and affection. Gifting a house does not require consideration.
- Rights and liabilities: The Gift deed outlines the rights and liabilities of both the parties, the one who is gifting the house as well as the receiver.
- Rights of the donee: The deed enlists the rights of the donee. A deed for gifting a house may specify that the donee enjoys the right of quiet enjoyment, the right to rent the property, and the right to perform renovations on the property.
- Delivery clause: The delivery clause details how the party that is gifting a house will deliver the property to the receiver.
- Revocation of deed: A gift deed states the possible grounds for revocation of the deed. A gift deed can be revoked either by a mutual consent of both parties, or by rescinding the contract between the two parties.
Benefits of Gift deeds
Gifting a house through a Gift deed has many benefits. They are:
- Lack of consideration: Gifting a house through a Gift deed allows you to transfer the property without any consideration being given in exchange. This ensures that the house is truly a gift, and is not dependent upon the other party giving you something in return.
- Legally admissible: Gifting a house through a Gift deed makes the Gift deed serve as legally admissible proof in case a conflict regarding ownership arises.
- Tax exemptions: Gifting a house through a Gift deed presents the possibility of tax exemptions, as the gift of property to relatives is exempted from income tax.
- Freedom of revocation: As long as a revocation clause is present in the Gift deed, the gift can also be revoked. This takes some of the inherent danger out of gifting a house.
How to draft a Gift deed
Thanks to the internet, it is easier than ever to draft a Gift deed to legitimise the process of gifting a house. ezyLegal offers online drafting services from verified lawyers. The process for drafting a Gift deed with ezyLegal is as follows:
- Select your document: Choose the deed that you would like to have drafted.
- Schedule a call with the lawyer: Schedule a call with the lawyer and discuss your requirements with a trained professional. They will guide you on what you must include in the Gift deed to ensure that it is properly drafted.
- Get your agreement drafted: During the call, the lawyer will understand what you need from the Gift deed and draft an agreement accordingly. The lawyer will then deliver a customized draft based on your needs.
Stamp duty and registration
The process of gifting a house does not end with drafting a Gift deed. To make the transfer of the title official, gifting a house also requires that you pay the stamp duty for the deed and duly register it with the Sub-Registrar’s Office. The exact stamp duty and registration fees vary from State to State, and even within States occasionally.
How to register a Gift deed
Normally, gifting a house would require going through a time-consuming registration process. ezyLegal has a service to solve this issue as well, through the Gift deed registration process. The steps for this are as follows:
- Create a Gift deed: To register a Gift deed, you would need a Gift deed to begin with. Get a Gift deed drafted.
- Get witnesses’ signature on the deed: The deed will require signatures from 2 witnesses to prove that it is authentic.
- Discuss your requirements with a lawyer: Schedule a call with ezyLegal’s team of lawyers and discuss your requirements with them.
- Estimate the value of the property being gifted: Estimate the value of the property being gifted to calculate the stamp duty and registration fees to be paid.
- Pay the stamp duty: Pay the necessary stamp duty amount to avoid having the Gift deed vitiated on technical grounds.
- Schedule an appointment at the Sub-Registrar’s Office: Choose a date and time to get your deed registered at the Sub-Registrar’s office.
- Pay registration fees at the Sub-Registrar’s Office: Pay the necessary registration fees, which are usually calculated on the value of the property being gifted.
- Present relevant documentation at the Sub-Registrar’s Office: Present the required documents, which includes the original Gift deed, photographs of the parties and the witnesses, the donor’s PAN card, and other documents.
- Registrar will officially record your Gift Deed: After all this, the Registrar will record your Gift deed, which legitimises it in the eyes of the law.
Gifting a house can be done through the legal instrument known as Gift deed. Gifting a house also requires payment of stamp duty, and Gift deed registration. After all the formalities have been completed, the transfer of ownership will be legally recorded.