I have a property that I jointly owned with my late husband who died without a will two years ago. I have three children, two sons and one daughter, and all are married. One of my sons and his family has been staying in the property for the past 25 years with me. I want to make my will. Can I make a will for the entire share of the house or just 50% as I am joint owner? Also, my daughter wants to relinquish her share either in my favour or in favour of one of my sons. Which is more tax friendly?
In order to respond to the queries raised by you, we are assuming that your late husband was a Hindu, that you and your husband were married as per Hindu rites (and not under the Special Marriage Act, 1954) and therefore, succession to his estate would be governed by the Hindu Succession Act, 1956.
Under the Act, the properties of a Hindu male dying intestate (without drawing up a will) devolve, in the first instance, equally on the heirs in class I of the schedule to the Act; his sons, daughters, widow and mother and the schedule also includes the specified heirs of predeceased sons and daughters. Therefore, upon your husband’s death, his share of the 50% in the property jointly owned with you, will be divided equally between you and your three children—each one of you will be entitled to a 12.5% share of his 50% share.
It may be noted that the concept of “tenancy by entirety” that is associated with joint ownership of properties, where the entire property will devolve upon the surviving joint owner, is not recognized under the Hindu laws of succession. Therefore, though you jointly owned the property with your late husband, on his death, his 50% share will not automatically vest in you. Instead, the aforesaid rules of succession will have to be followed.
In your case, you will now own 62.5% of the property—50% of the property owned by you as joint owner and upon your husband’s death, an additional share 12.5%.
You can therefore make a bequest in your will of your entire right, title and interest in the property, which would be 62.5% of the property.
If your daughter wishes to transfer her share in the property, then she could do so by gifting the same either in your favour or in favour of your son. Under section 56(2)(vii) of the Income-tax Act, 1961, gifts by relatives are not taxed in the hands of the recipient—whether it be you or your son. However, to give effect to the gift, a gift deed would need to be executed and depending upon the state where the property is located, the applicable stamp duty and the registration fees will need to be paid for on the gift deed. It is also recommended that you consult a chartered accountant with respect to the tax benefits.
Shabnum Kajiji, Partner, Wadia Ghandy & Co. Advocates, Solicitors and Notaries
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