Gift Deed vs Will: Gift deed or will can be used to transfer property to any of your relatives such as children or spouse. However, both these options have their own characteristics. Apart from this, taxation is also an important point. If you want to understand the difference between gift deed and will in simple words, then it can be said that if one wants to transfer property immediately, then it can be done through gift deed whereas property is transferred only after death through will. Which option to choose in gift deed or will to transfer property, it is important to consider many aspects apart from tax.
Get Property Back: Property transferred in the name of children can also be returned, this condition must be fulfilled
Take such decisions regarding Gift Deed vs Will
- The option of gift deed can be adopted for instant property transfer whereas property transfer takes place only after death through a will.
- In some cases, it has been heard that children were thrown out of the house by the children on transfer of property through gift deed and they are somehow making their living. In such a situation, tax and investment expert Balwant Jain says that if there is no great need like in many cases it is necessary to transfer the property immediately, then except in such cases, the property should be transferred only through will so as to evict from one’s own property. Don’t let it happen.
- There is no need to register a Will or get it stamped, whereas in case of a gift deed, stamp duty has to be paid on the market value of the property. In some states, relatives are exempted from paying stamp duty on transfer of property through gift deed.
- A will is not required to be registered, due to which it is a cheaper way to transfer property, but it should be registered to avoid any succession problems.
- There is no tax liability on transfer of property through a will and no tax liability is levied on transfer of property through gift deed also to relatives like spouse or children but if property is transferred through gift deed to non-relatives. If you do, then there is a tax liability on it.
ITR Filing: How can filing income tax return be beneficial even if the income is not taxable? Know some interesting reasons
This is how tax liability arises on gifting to non-relatives
- According to tax expert Balwant Jain, if a gift of more than Rs 50,000 has been transferred to such a person through a gift deed, then adding it to the income of the gift recipient will make it taxable as per his tax slab.
- If a gift is given to a spouse by way of a gift deed, then the person who has given the gift will be liable to tax on the income derived from it.
- If the children receive a gift, if there is any passive income on the gift of more than Rs 1500, then it will be added to the income of the parent who earns more and it will be taxable. Once, in whose income the passive income of gifts received by children is added, the tax will always be calculated by adding it to the income of the same person unless the Income Tax Officer directs to club it with the income of another person.