Ownership of son in flat

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Querist : Anonymous

Querist : Anonymous (Querist)

09 March 2013 i have bought a new flat,for which all the payments have been made from my personal account,,i want to make my son 50% owner in my new flat,i want to know how to do under two circumstances:

1.if property is yet to be registered.
2.if the registry of the property is already done in my name.

also mention the tax implication under both circumstances and least expensive way
thanks

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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09 March 2013 1. If property is yet to be registered:
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Include his name in the Purchase Deed by making him a co-owner. Also specify his share in the property in the said Deed.
.
2. If Registry already done:
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Execute a Gift Deed in his favour by specifying his share in the property.
.
Both the incidences are tax neutral.
Only Registration expenditure will have to be incurred by you.
.

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Querist : Anonymous

Querist : Anonymous (Querist)

11 March 2013 addional querry:

if the property not yet registered:

do i have to transfer 50% of the flat amount from his bank account and also reverse/withdraw equal amount of my share to make him co-owner?

if the property already registered:

u are suggesting GIFT as the easy and simple option?also i want to know if the 50% gift to him can be revoked by me in future??

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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09 August 2024 ### Transferring Ownership of a Flat to Your Son

Here’s how you can transfer 50% ownership of a flat to your son under both scenarios and the associated tax implications:

### 1. **If the Property is Yet to be Registered**

**Procedure:**
- **Joint Purchase Agreement**: When the property is yet to be registered, you can include your son's name as a joint owner in the purchase agreement. This means you will need to amend the agreement to reflect your son as a co-owner.

- **Payment**: You don’t need to transfer money from your son's bank account to your account or vice versa. The contribution is considered in the form of the agreement and not actual bank transfers.

- **Registration**: When you go for registration, both names will be included in the sale deed as co-owners. This will legally establish your son’s 50% ownership.

**Tax Implications:**
- **Stamp Duty**: The stamp duty will be applicable on the entire value of the property as per the prevailing rates in your state. The calculation of stamp duty is usually based on the property value and is payable at the time of registration.

- **No Immediate Tax**: If the flat is being registered jointly, there is no immediate tax implication on the transfer of ownership during the purchase phase. The cost of acquisition will be shared proportionately for capital gains purposes when the property is sold in the future.

### 2. **If the Property is Already Registered in Your Name**

**Procedure:**
- **Gift Deed**: The simplest way to transfer 50% ownership to your son is by executing a gift deed. This involves:
- Drafting a gift deed where you legally transfer 50% ownership of the property to your son.
- The gift deed needs to be executed on a non-judicial stamp paper of appropriate value as per state regulations.
- Register the gift deed with the local sub-registrar.

**Tax Implications:**
- **Stamp Duty**: Stamp duty on gift deeds is usually lower than for a sale, but this depends on the state regulations. It is often calculated on the market value of the share being transferred.

- **Income Tax**: Gifts to relatives, including children, are generally exempt from income tax. However, the recipient should still report it in their income tax returns as “Exempt Income” under the category of “Gifts received from relatives.”

- **Capital Gains**: When you sell the property in the future, the cost of acquisition for your son will be considered the same as your cost of acquisition. The capital gains will be computed based on the total sale value minus the total cost of acquisition (including the value at the time of gift).

- **Revocability**: Once the gift deed is executed and registered, it generally cannot be revoked. To retain some level of control, you may consider alternative arrangements like a transfer of shares in a company owning the property or a trust arrangement, though these can be more complex and costly.

### Summary of Least Expensive Way:

- **Before Registration**: Add your son as a joint owner in the purchase agreement and during registration. No need for a formal gift deed.

- **After Registration**: Use a gift deed to transfer 50% ownership. Ensure the gift deed is registered to legally transfer ownership and handle stamp duty accordingly.

**Legal and Tax Advice:**
For both scenarios, consult with a legal expert or a tax advisor to ensure compliance with local laws and regulations. This will help in accurate documentation and addressing any state-specific requirements.