Yes it can be transferred as stated above
Transfer of ancestral property to HUF
Hi, My grandfather passed away recently. The ancestral property(agriculture land) which was in my Grandfather's name is getting partitioned to be transferred to my father and his siblings now. My Father and his siblings have come to a an understanding on the division of the assets on who gets what. My father wishes to get his part of the assets transferred to an HUF (consisting of me(unmarried) my mother and my Father as kartha ). Since his marriage (which happened a couple of decades back), no official documentation or PAN was created for this HUF till now. This is the first time. Also his siblings are not interested in forming their own HUF. they just plan to get their part transferred to their name directly. 1. What is the procedure now to form this HUF and transfer my father's part of the ancestral property to the HUF?i mean from legal perspective, what documentation and procedure is required to achieve this ? 2. is a PAN card for HUF required beforehand for this ? if yes what documents would be required to apply for this ? or should we go for HUF PAN post this partition ? 3. Can the property be transferred to my father first and then later on pass it on to HUF ? Will this be different from directly getting it transferred to HUF from a tax implication perspective ? Note: the ancestral property is in my grandfather's name currently (i mean not in any HUF's name). Thanks in Advance.
Asked 2 years ago in Property Law
Religion: Hindu
11 Answers
Your father should first get his share of ancestral property transferred in his name .deed of partition should be stamped and registered
2) father can then form HUF consisting of himself your mother and you
Property owned by grandfather does not amount to ancestral property. An HUF cannot be created under a contract, it is created automatically in a Hindu Family. Taxes benefit can be availed by pooling assets in an HUF. To create HUF account by executing an HUF deed. HUF deed is a written formal document on a stamp paper stating the names of Karta (Eldest member of the family) and the Coparceners (Family Members). The name of the HUF is the name of the Karta followed by HUF. Thereafter, PAN & TAN be obtained and also to Open Bank Account. So property should be pooled in and HUF directly. If property shall be transferred to father then the same would attract stamp duty, TDS etc.
HUF means Hindu Undivided Family.
A Hindu family can come together and form a HUF.
HUF is usually used by families as a means to build assets.
One person cannot form HUF, it can only be formed by a family.
HUF usually has assets which come as a gift, a will, or ancestral property, or property acquired from the sale of joint family property or property contributed to the common pool by members of HUF.
Once a HUF is formed it must be formally registered in its name. A HUF should have a legal deed. The deed shall contain details of HUF members and the business of the HUF. A PAN number and a bank account should be opened in the name of the HUF.
Since your father is inheriting the property by a partition deed, he first has to get the property transferred to his name after which he can add it to the HUF.
Please note that the grandfather's property is not ancestral in nature hence you cannot claim a share in your grandfather's property as a right. Therefore the property inherited by your father through the partition becomes his own and absolute property.
The head of a HUF is called the Karta, he is the senior-most male member of the family.
The HUF being a separate taxable assessee, can claim a deduction under section 80C. However, the member and the HUF cannot claim a deduction in respect of the same investment made or expense incurred.
Thank you all for the response. 1. Let me clarify that the property that i am talking about has been in my family for many generations(more than 4) and got handed down to my grandfather and it is in his name currently. So i believe this can be considered as ancestral property right ? To elaborate my queries further -- 2. In the partition deed can we directly quote that the the part of the inheritance (the one which my father is going to get) will be transferred to my father's HUF directly instead of my father's sole name ? And get that registered ? And subsequently get the specific property also registered to the HUF directly ? 3. if yes ? then a HUF deed and HUF PAN is required beforehand to complete the above partition deed and registration process ? 4. As per my understanding, if the property gets transferred first to my father and then it is transferred to the HUF, then it is deemed as a gift from its member to the HUF and it will have additional tax implication w.r.t to clubbing of income. is my understanding correct ? if yes, we want to avoid this and hence the query on directly getting the inheritance transferred from my grandfather to HUF.
Asked 2 years ago
It is ancestral property
2) property is not mentioned on records as HUF property
3) your father should receive his share of property as per partition deed and then form HUF
4) as far as tax implications are concerned consult a CA
4) deed of HUF and PAN Card in name of HUF is required for registration as HUF property
1. For constituting ancestral property there are several conditions which require to be fulfilled like five or more generations from father side, and it was intact and was not received in division etc. and if conditions are fulfilled then property can be ancestral property.
2. If father pool his share in HUF then it can be counted as HUF property. For getting property transferred in name of father stamp duty etc shall be payable and likewise when it would be pooled in HUF.
3. Yes. Pl refer earlier reply.
4. As such no other additional tax complication.
1. Once the property got to transferred to your grandfather's name even though it came down from generations, it loses its ancestral nature, besides the properties were subseuently partitioned among the next generation children from your grandfather hence it will not more be considered as ancestral property, instead your father's share of property in his hands would be treated as his self acquired proeprty.
2. Since it becomes yor father's self acquired property, why do you want to use technical jargon, it is even otherwise his own and absolute property, hence he can add this proeprty as his own property into his own HUF.
3. Once a HUF is formed it must be formally registered in its name. A HUF should have a legal deed. The deed shall contain details of HUF members and the business of the HUF. A PAN number and a bank account should be opened in the name of the HUF.
4. The HUF being a separate taxable assessee, can claim a deduction under section 80C. However, the member and the HUF cannot claim a deduction in respect of the same investment made or expense incurred.
Dear Client,
To ensure the proper transfer and registration of ancestral property, it is recommended that your father follows these steps:
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Your father should initiate the process of transferring his share of the ancestral property in his name. This involves executing a deed of partition that clearly outlines the distribution of shares among the co-owners. The deed of partition should be appropriately stamped and registered with the relevant authorities to make it legally valid.
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Once your father's share of the property is transferred and registered in his name, he can proceed to form a Hindu Undivided Family (HUF). The HUF will consist of your father, your mother, and yourself. It's important to note that the property in question is ancestral property, which means it has been inherited through generations.
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Although the property may not be explicitly mentioned as HUF property in official records, the formation of the HUF can still be established based on the ancestral nature of the property and the HUF's existence in practice. Your father should ensure that he receives his rightful share of the property as per the partition deed before forming the HUF.
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It is advisable to consult a Chartered Accountant (CA) to understand the tax implications associated with the formation of an HUF. The CA will provide guidance on matters such as income tax, capital gains tax, and any other relevant tax considerations.
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To register the property in the name of the HUF, your father needs to prepare a deed of HUF, which outlines the formation of the HUF and includes the details of its members. Additionally, a PAN Card in the name of the HUF is required. These documents should be prepared and submitted as part of the registration process to establish the property as HUF property.
- After getting the share in the ancestral property , it will be considered the self acquired property of your father , and then he can form HUF with other family members , and he can be Karta of the HUF.
- A partition deed can be executed with other claimants of the property.
- Further, after forming the HUF , it must be registered in its name with a Deed .
- This Deed should contain details of HUF members and the business of the HUF.
- Further , a PAN number and a bank account should be opened in the name of the HUF.
You can sell it even without transferring if all legal heirs are willing
there can be a smaller HUF within a bigger HUF
HUF is a creation of law. it does not require any documents or agreement
so there will be a bigger HUF which is your GF's HUF
And within that there will be a smaller HUF which is your father's HUF
Upon partition of the GF's HUF, the share that your father will get, can be held by him as the karta of his own small HUF
So just mention in the partition deed, that so and so share is being transferred to the HUF of [son's name]
so that share will directly be held by the karta [your father] of the smaller HUF
A HUF PAN [for the smaller HUF, of which your father is the karta] can then be applied
