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If divorced, ex-spouses may not be counted as family member

It is advisable to seek specific legal and tax counsel in this matter

I recently got divorced and have a property wherein I am the primary owner and the ex-husband is co-owner, both on the agreement and loan documents. As per the petition of divorce and the divorce decree, we have mutually agreed to award the property to me. If I want to sell it, should I choose a transfer deed or a gift deed to transfer complete ownership to my name, or would a power of attorney be better? Also, if my ex-husband signs the transfer deed or the gift deed, how much stamp duty will I have to pay?

—Rupal Rawal

Since you want to sell the property, the authority to sell must be present either by ownership or through power of attorney. Let us discuss all the three scenarios—gift deed, transfer deed or power of attorney.

Transfer deed: Your ex-husband can transfer his share of property to you by executing a deed of transfer on payment of consideration by you. No sale can take place or no deed of transfer can be executed without payment of consideration by you to him. The transfer must be effected by a registered and stamped instrument signed by him or on his behalf, and must be attested by at least two witnesses.

Gift deed: Your ex-husband may execute a gift deed in your favour, thereby gifting his share in the property. A gift deed allows one to gift his assets or transfer ownership without any exchange of money. The gift of immovable property must be in accordance with section 122 of the Transfer of Property Act, 1882. Hence, your ex-husband must transfer his share voluntarily, without consideration, and it must be accepted by you during your lifetime while he is still capable of giving. A gift of immovable property in this case will also have to be effected by a registered and stamped instrument signed by or on behalf of your ex-husband, and must be attested by at least two witnesses.

In both of the aforesaid cases, stamp duty will be payable on the deed (of transfer or gift) in accordance with the provisions of the stamp act applicable to the state in which the property is situated. For example, in Mumbai, the stamp duty as per article 25 of schedule I of the Maharashtra Stamp Act, 1958, will be applicable. Registration charges also differ from state to state.

Stamp duty on a gift deed if the gift is made to a family member, including to a husband or wife, is chargeable at a lower rate in some states. But if the divorce decree is final, then you and your ex-husband may not get the benefit of the lower rate.

Power of attorney: This can be executed by your ex-husband in favour of you to sell his share. But it is not a transfer of property but only a contract for execution of transfer on behalf of executant. For sale of immovable property, as in the present case, the power of attorney has to be sufficiently stamped and registered.

The stamp duty on a power of attorney authorizing sale of immovable property in many states (including Maharashtra) is the same as payable on a conveyance of immovable property (the only rebate available is when the power is given to certain stipulated family members, which again will not be the case in the present instance).

Please also note that while you can avail the option of getting a power of attorney for the sale of property from your ex-husband, in such a case, you will not get ownership of the property, and in future, disputes may arise as to the distribution of sale proceeds.

Release deed: One more option that could be considered is your ex-husband executing a release deed in your favour, whereby he releases or renounces his claim on the property. Again, the release must be effected by a registered and stamped instrument signed by him or on his behalf, and must be attested by at least two witnesses. In Maharashtra, while the stamp duty payable is the same as that payable on a conveyance, the amount is payable on the market value of the share, interest, part or claim being renounced.

These are the options available to you. But it would be advisable to seek specific legal and tax counsel in this matter.

Queries and views at mintmoney@livemint.com

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