Home / Money / Calculators /  Property gifted to family will attract stamp duty of 2%

My father bought an apartment in Mumbai which is registered jointly in our names. He now wants to transfer the apartment to me. I gather that gifting is a better option than relinquishment in terms of stamp duty and taxation. In case of gifting, can you tell me if the stamp duty would be payable only on half the value of the apartment, though I have not contributed during purchase? Also, as I am already a co-owner, would it be advisable to gift his share to another person in the family, say my wife?

—Nakul Joglekar

While answering this query, we are assuming that the said property is situated in Mumbai and that the provisions of the Maharashtra Stamp Act, 1958 shall be applicable. And, since the property in question has been acquired by your father, it will not fall within the ambit of ancestral property.

There are two kinds of joint ownership, i.e. joint tenancy and tenancy in common. In case of joint tenancy, on the demise of one of the joint owners the property automatically passes to the survivor. In case tenancy in common, upon the demise of one of the joint owners the property passes to the heirs of the deceased and not to the surviving owner. Please note that unless your title deed (deed of conveyance) specifically states that the property is owned by you and your father as joint tenants, it is presumed that the property is owned by both of you as tenants in common. You will therefore have to determine how the property is being held.

As a note of caution, even though the property may be held as a joint tenancy, since you haven’t paid for your half of the property, on your father’s demise, your father’s other heirs could claim a stake in the entire property and not just in his share. Therefore, you may wish to seek specific legal advice, based on the manner in which the title deeds/agreements have been drafted, whether it is advisable for your father to gift the entire flat to you or only his 50% share. Alternatively, you father can draw up a will and bequeath the entire flat to you.

With reference to your first question, if your father is gifting only his share of the property to you, the gift deed that your father shall execute in your favour must clearly mention that he is gifting his 50% share in the said property to you.The stamp duty payable will only be on the half of the market value (ready reckoner value) of the property, as he is gifting only his half share to you. The stamp duty payable in cases where a gift is being made to a family member, i.e. to the husband, wife, brother or sister of the donor or any lineal ascendant or descendant of the donor, then the amount of duty chargeable shall be 2% of the market value (ready reckoner value) of the property.

As per Article 52 of Schedule I to the Act, the stamp duty payable on a release deed is (a) 200 if the same is in respect of ancestral property and the release is in favour of the persons named in the applicable Article, or (b) in every other case, 5% of the market value (ready reckoner value) of the property. Since the property is not ancestral property, for a release deed, the latter will apply. Thus from a stamp duty perspective, it is advisable to execute a gift deed rather than a release deed.

With reference to your second question, from a stamp duty perspective it does not matter whether you are a co-owner of the property. In the event your father gifts the property to your wife, the stamp duty payable on the gift deed shall be 5% of the market value (ready reckoner value) of the property, as a daughter-in-law does not come within the aforementioned definition of family member enumerated in Article 32 of Schedule I to the Act.

Please note that as per section 17 of the Registration Act, 1908, a gift deed the subject matter of which is an immovable property, is a compulsorily registerable document. Thus the same has to be registered with the registrar of sub assurances within whose jurisdiction the said property falls.

For advise on the tax implications, it is recommended that you consult a tax adviser or chartered accountant.

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