Gift deeds and sale deeds are among the very important legal deeds used to transfer the ownership of a property. The biggest difference between them is how they break down the transfer and whether or not there’s money involved.
For instance, when you’re the one signing gift or sale deeds, you should know if there’s a difference. In this article, we are going to compare the two in detail.
Gift Deed vs Sale Deed.
If you gift any property with value then you use a gift deed but if you sell any property at a certain amount then you use the sale deed. These key differences can be classified into the following categories:
Transfer of Property Ownership
Making gift deeds calls for love, esteem, or in great good faith so that property ownership is transferred without cost to the treasury.
However, sale deeds must include an exchange of money and the transfer of ownership is legalised after the agreed sale price has been fulfilled.
Fees Involved
Depending on property value, gift deeds may mean certain tax fees. When transferring property by sale deeds, the buyer must pay the seller and stamp duty and registration fees at the market value of the property.
Need for Registration
Registration of gift deeds is not obligatory but highly desirable in order to make it legal. Sale deeds, for instance, have to be registered and done at the office of sub registrar’s.
Comparison Table: Gift Deed vs Sale Deed
| Feature | Gift Deed | Sale Deed |
| Transfer of Property Ownership | No exchange of money involved | Involves an agreed-upon payment |
| Finances Involved | May involve tax fees | Includes stamp duty and registration charges |
| Registration | Not mandatory but recommended | Mandatory |
| Usage | When gifting property | When selling property |
Legal Processes in Drafting a Gift Deed
The legal process for drafting a gift deed involves several steps:
Stamp Paper: Deed should be prepared on stamp paper, preferably of stamp value equivalent to 5% of property value.
Details of Donor and Donee: Greedily (or otherwise) identify the give (donor) and take (donee).
Property Description: Property details should be complete and a statement of gifting.
Signatures: Both sign the deed.
Optional Registration: Registering your gift deed isn’t compulsory but offers legal protection should anything go wrong.
Legal Processes in Drafting a Sale Deed
Drafting a sale deed follows these steps:
Details of Buyer and Seller: Provide the information about the property, sale prices and also on payment methods.
Encumbrance Certificate: You need to establish the seller confirms that the property is free from legal claims by providing this.
NOC: For a property which is under housing authority jurisdiction, a No Objection Certificate (NOC) is needed.
Payment and Signatures: After the buyer pays they sign the deed, in the presence of witnesses.
Mandatory Registration: Even if the woman is the first owner, she will have to register the deed with the sub-registrar office, and pay stamp duty and registration fees.
Pros of a Gift Deed
- They transfer ownership during the donor’s lifetime.
- It may reduce squabbles between families over ownership.
- Possible tax benefits.
- Some rights may remain reserved with the donors.
Cons of a Gift Deed
- Once a gift is given ownership cannot be reclaimed.
- Tax implications may apply.
- The donor gives up all the property rights.
- Drafting has the possibility of coercion.
Pros of a Sale Deed
- It guarantees clear rights transfer.
- This legal protection is provided for the buyer.
- It enhances transparency within the transaction process.
Cons of a Sale Deed
- Involves various costs.
- The property can be taxable by capital gains tax.
- The process of selling can be long.
Conclusion
There are gift and sale deeds, both of which are essential in transferring ownership of property, so long as they’re drafted properly and legally. The registration of these documents also provides a layer of protection to the ownership transfer process. Walls and Dreams If you want to study the nuances of these deeds, you may contact your local sub-registrar’s office or a legal expert.
FAQs
Which is better: a will or a gift deed?
A will passes property after death and a gift deed passes property during the owner’s lifetime. It all comes down to your preference of when to transfer ownership.
How strong is a gift deed?
If all these are done properly, i.e. gift is properly drafted, signed, notarized and registered, it is a strong gift deed.
