How tax can be avail on gifted property?- Property Hotline

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Expert: Samir Kanabar, Partner- Tax and Regulatory Services at EY.

Question: My brother-in-law had applied for a DDA flat in the year 1996 & got an allotment of a fully constructed flat that required immediate full down payment. As he had no funds or arrangements of loan he decided to back out & I paid full amount including initial payment with the application. Therefore the flat was 100% financed by me (paper trail available) but on paper it continues to be in the name of my brother-in-law as the application & conveyance deed was done in his name. Due to unexplainable reasons the flat has continued to be in his name. The flat has been on rent off & on and I have been including the income in my annual tax return and paid tax each year as I am aware that I am economical owner having made full payment. As we are both getting old, we would like to complete the transfer of the property in my name but I have been suggested that it will be simpler to transfer it in the name of my daughter who is 18 +. Can my bother in law gift this property to my daughter?

Answer: All the benefits belong to the legal owner of the house. A gift between relatives is permissible and such gift are not taxable as per the income tax act. Both donor and donee are not applicable for the tax. So blood relation gifts are not taxable but they are permissible. Gift deed would be the simplest procedure. Even though it is tax-free you will have to pay for the stamp duty. But for gift there’s some concession for stamp duty. So gift deed is the way to go because it is tax friendly and also it is the simplest way to transfer the property.