A gift deed is a legal document that transfers the ownership of a property or asset from one person to another without any monetary consideration. It is a popular tool for transferring assets as a gift between family members or close friends. Here are some advantages, disadvantages, and the procedure for creating a gift deed:
- Tax benefits: If you gift a property or asset to a close family member, you may not have to pay any gift tax on the transaction.
- Quick transfer of ownership: A gift deed can be used to quickly transfer ownership of a property or asset, without the need for a lengthy and expensive legal process.
- No stamp duty: In some states, gift deeds may be exempt from stamp duty, which can save a significant amount of money.
- Irrevocable: Once a gift deed is executed, the transfer of ownership is irrevocable, and the donor cannot take the property back.
- No consideration: A gift deed does not involve any monetary consideration, which means the donor cannot demand any compensation or benefit from the recipient in return for the gift.
- Potential for disputes: Gift deeds may lead to disputes between family members, especially if the gift is perceived as unfair or unequal.
The procedure for creating a gift deed may vary depending on the state where the property is located. Generally, the following steps are involved:
- Consult a lawyer: It is advisable to consult a lawyer who specializes in property law to draft the gift deed.
- Prepare the deed: The lawyer will prepare the gift deed, which should include the details of the donor, recipient, and property or asset being gifted.
- Get the deed stamped: The gift deed may need to be stamped as per the stamp duty laws of the state.
- Register the deed: The gift deed must be registered with the local sub-registrar’s office within the stipulated time period, which may vary depending on the state. Both the donor and recipient must be present during the registration process.
- Obtain proof of ownership transfer: After registration, the donor should obtain a certified copy of the gift deed, which serves as proof of the transfer of ownership.