A property can be transferred for various purposes and reasons. In order to facilitate such a transfer Indian laws have introduced following different methods:
1. Sale deed
In a transfer of property, the most important document is the sale deed. A sale deed will contain every detail related to the deal, beginning with the names and addresses of parties involved, the size of the property in question, its build, its location and access points.
The main purpose of the deed is to certify that the property is free from encumbrance. This means that the seller has complete ownership and there is no lien on the same. In case the property has been mortgaged, it should be settled before the deed is signed.
It would also, of course, include the sale price, the token amount given, the remaining payment to be given, and all other details of the transaction. All other documents handed over to the buyer would also be mentioned in the deed. This deed needs to be registered with the sub registrar of the area of the property in question. Stamp duty and registration charges are levied on the same. Capital gains tax is also levied under such transactions.
It is important to note that Capital gains tax is not levied if another property is bought in lieu of the property which is being sold.
2. Gift deed
This document allows you to gift your assets or transfer ownership without any exchange of money. In case the property in question is an immovable property, a gift deed needs to be registered with the Sub - registrar of the area in which such transfer is taking place. Stamp duty charges are levied on the said transfer. There will not be any tax implication such a transfer. Also a gift deed can be challenged in court, but it cannot be revoked. In case of movable property a gift deed is important but it need not be registered.
3. Relinquishment Deed
This is the most commonly used method to transfer property right of a co-owner to another co-owner. Also it is a good option when it comes to transfer of ones share in a jointly held property. When such a transfer is done, stamp duty charges are levied upon. This type of deed is revocable and this type of deed does not give any tax benefits. Also it is important to note that both stamp duty and tax are applicable on the portion of property that is being relinquished and not on its total value.
This information is provided for knowledge purpose only. Always consult an expert property and tax lawyer before initiating such law related procedures.