• Gift deed or release deed?

Which is a better option if my elder brother by blood, wants to relinquish or gift his share? I have made all the payments and cleared my dues on this property. Is there any stamp duty applicable?
Asked 2 months ago in Property Law
Religion: Hindu

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12 Answers

Your brother can execute gift deed in your favour 

 

it should be duly stamped and registered 

Ajay Sethi
Advocate, Mumbai
80564 Answers
4945 Consultations

5.0 on 5.0

1. In both the cases payment of money to your brother will not be required and if you mention such payment, it will become sale and you shall require sale deed to be registered.

 

2. You can register a gift deed from your brother to you without mentioning about any payment in this regard. 

Krishna Kishore Ganguly
Advocate, Kolkata
25067 Answers
725 Consultations

5.0 on 5.0

- The two said option available for you , and legally both should be registered , hence if your brother having his share in the property , then he can execute a Relinquishment deed for releasing his share in the property in your name .

- But , if your brother wants to transfer his property in your name , then he can execute a Gift deed in your favour. 

- Gift deed registration required nominal fee in Maharashtra, if both are related to blood. 

Mohammed Shahzad
Advocate, Delhi
5973 Answers
60 Consultations

5.0 on 5.0

The actual character of the transaction intended by the executants is the decisive factor in determining whether the document is a release/gift deed and not the nomenclature or the language of the document. It means that what type of deed can be executed will be determined by the nature of the transfer\transaction.

If there are only two shareholders of the property (you and your brother only), then only it is eligible for relinquishment deed. If there are other shareholders, it has to be a gift deed and a relinquishment deed wouldn't be applicable.

There is no stamp duty for registering relinquishment deed but for Gift deed, there are applicable charges. In any case, you have to register the deed.  

 

 

Aniruddha Chakraborty
Advocate, Bangalore
35 Answers

5.0 on 5.0

1. Blood Relation Property Transfer should be executed thru a Registered "Gift Deed".

2. In MH, Stamp Duty on Gift Deed: 500/-  Registration Fees: 200/-

Hemant Agarwal
Advocate, Mumbai
5545 Answers
25 Consultations

5.0 on 5.0

If the property is co-shared i.e., inherited by you and your brother from your father then you both become shareholders, in that case if he has agreed then he can execute a registered release deed relinquishing his rights in the property.

If the property is jointly owned then he can transfer his share in the property by executing a registered gift settlement deed in your favor.

In Maharashtra state there is no stamp duty payable for transfer of immovable property between blood relatives, you may have to pay only Rs. 500/- towards stamp duty on such a registered transfer of immovable property under the given situation.

 

T Kalaiselvan
Advocate, Vellore
70617 Answers
986 Consultations

5.0 on 5.0

Dear Client,

Transfer deed will better. There is no atamp duty in Haryana on Transfer Deed. You have confirm from Local Lawyer for the same in Maharastra.

Jaswant Singh
Advocate, Gurugram
903 Answers
2 Consultations

4.8 on 5.0

Gift deed is always better option. 

Devajyoti Barman
Advocate, Kolkata
22032 Answers
325 Consultations

5.0 on 5.0

Dear Sir,

If you have paid amounts then it is better to go for registered relinquishment deed only. Please read the following.

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When it comes to transferring property, a sales deed may not always fit the bill, especially if you want to pass it on to relatives. In such cases, instruments like a gift deed or relinquishment deed can come to your rescue. However, blindly choosing either can lead to problems.You must understand the purpose of each document before getting it drafted. Know the benefits as well as drawbacks of each.

Gift deed

This document allows you to gift your assets or transfer ownership without any exchange of money. To gift immovable property, you just have to draft the document on a stamp paper, have it attested by two witnesses and register it. Registering a gift deed with the sub-registrar of assurances is mandatory as per Section 17 of the Registration Act, 1908, failing which the transfer will be invalid. Besides, such a transfer is irrevocable. Once the property is gifted, it belongs to the beneficiary and you cannot reverse the transfer or even ask for monetary compensation.

However, if you want to gift movable property like jewellery, registration is not compulsory. At the same time, a mere entry in an account book is not sufficient to establish a transfer. Apart from physically handing over the property, you need to back it with a gift deed. The process is slightly different if you are gifting company shares. You have to fill out the share transfer form and submit it to the company or registrar, and the transfer agent of the firm. Once again, get a gift deed drawn and executed to complete the transfer, but the document need not be registered.

Advantages: The biggest benefit is that there is no tax implication if you are gifting property to certain relatives.However, you still have to pay stamp duty, which can vary from 1-8% for immovable property, depending on the state in which the transfer takes place. If you are gifting property to a non-relative, the stamp duty would be higher at 5-11%. You have to pay this duty even in the case of movable property. Expect to shell out 2-8% in case of relatives, and 3-8% for non-relatives. For physical shares, the stamp duty is 0.25%, but if these are in the demat form, you don’t have to pay

Limitations: Though a gift deed cannot be revoked, it can be challenged in court, coercion and fraud being the most common grounds. So, if you have been tricked into gifting property, you can take the matter to court and have the transfer reversed. It can also be challenged on the grounds that the donor was not of sound mind or a minor.Also, you cannot gift a property that’s held jointly.

Relinquishment deed:

This document is quite different from a gift deed, though the legal implications are the same. You can use this instrument if you want to transfer your rights in a particular property to another co-owner. Such a transfer is also irrevocable even if it is without any exchange of money. As with all documents related to the transfer of immovable property, a relinquishment deed needs to be signed by both parties and registered.

The stamp duty is similar to that for a gift deed. However there is no discount for relatives, nor are there any tax benefits. Also, both stamp duty and tax will be applicable only on the portion of the property that you relinquish, not on its total value. You can also use this deed to transfer movable property without registration, but it is typically used for immovable property.

Advantages: It allows seamless transfer of your share in a jointly-held property. This document is most commonly used when a person dies without leaving behind a will and all siblings end up inheriting the property. Unlike a gift deed, you can draw the relinquishment deed for monetary consideration.

Limitations: There are no tax benefits, for as per the tax laws, the term ‘transfer’ includes relinquishment, not gift. Hence, when you are relinquishing property for monetary consideration, it will result in capital gains for the transferor. If the consideration is less than the stamp duty value of the property, the difference between the stamp duty and the consideration will be taxed in the hands of the buyer. If you relinquish it without any consideration, the stamp duty value of the property will be its sales price.

Choose between release and gift deeds for property transfer

It is mandatory to register gift, release or transfer deeds with the sub-registrar of assurances

Example:

My mother and her sister inherited their father’s property. My mother intends to buy her sister’s rights at market value. Does she have to show this as a sale or make a release deed for consideration or show it as a gift? Eventually, my mother will give her sister the market value for her share. We were told that a release deed will not be possible, and it will have to be a sale deed. Please advice.

Answer

Since your mother and her sister inherited the property in question from their father, we are assuming that the property is at present held jointly in the names of your mother and her sister. You may take one of the following steps to have your aunt’s share transferred in your mother’s name:

1) Your aunt may execute a gift deed in favour of your mother, thereby gifting her share in the property. A gift deed allows one to gift his/her assets or transfer ownership without any exchange of money. The gift of immovable property must be according to section 122 of Transfer of Property Act, 1882. Hence, your aunt must transfer her share of the property voluntarily, without receiving any consideration from your mother, and your mother must accept it during the lifetime of her sister while she is still capable of giving.

The transfer must be effected by a registered and stamped instrument signed by or on behalf of your aunt and must be attested by at least two witnesses. Stamp duty as per the applicable state is payable on the gift deed.

Since your mother wants to pay consideration at market value for the concerned portion of the property, a gift of that portion of the property will not be possible.

2) Your aunt may execute a release deed or relinquishment deed in favour of your mother, thereby releasing her share in the property in favour of your mother.

A release deed is quite different from a gift deed, though the legal implications are the same. Unlike a gift deed, you can draw the release deed for monetary consideration. A release is always an interest or share of the concerned property. The person in whose favour the release is made usually has a pre-existing interest in the property. You can use this instrument to transfer your rights in a property to another joint owner(s)/co-owner(s). Such a transfer is irrevocable.

As with all documents related to the transfer of immovable property, a release deed needs to be signed by both parties, stamped and registered. Stamp duty will be applicable only on the portion of the property that is relinquished.

3) Your mother can purchase her sister’s share by executing a deed of transfer and on payment of consideration (the latter renders the sale valid). Stamp duty will be payable on the deed of transfer, and the deed has to be registered.

Considering the facts mentioned, executing a transfer deed may be a preferred.

Please note that it is mandatory to register a gift deed, release deed or transfer deed with the sub-registrar of assurances as per section 17 of the Registration Act, 1908, otherwise the transfer will be held invalid. Thus, on execution of any of the aforementioned documents, the same will be required to be registered with the office of the sub-registrar of assurances within whose sub-district the whole or some portion of the property is situated, within a period of four months from the date of execution of any of the aforementioned documents.

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Kishan Dutt Kalaskar
Advocate, Bangalore
5700 Answers
258 Consultations

4.8 on 5.0

Hello!

If you have made payments, then relinquishment deed is a better option as in a gift deed there is no payment for receiving the gift. 

Stamp duty would be applicable in both scenarios. The amount would depend on the value of the property and the law of state where the property is situated. 

Best wishes. 

Agam Sharma
Advocate, New Delhi
617 Answers
4 Consultations

5.0 on 5.0

1. If he wants to gift then it has to be a gift deed.

2. For stamp duty part of your query only a local lawyer well versed with local laws can answer. In most states transfer of property from a blood relative to another is exempted from stamp duty.

Ashish Davessar
Advocate, Jaipur
30295 Answers
880 Consultations

5.0 on 5.0

gift

Yusuf Rampurawala
Advocate, Mumbai
5916 Answers
43 Consultations

5.0 on 5.0

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