I own an apartment in south Mumbai. I am a senior citizen. I need to understand the ramifications of gift tax re my above property. I have already registered my two children as nominees with my CHS. I believe a gift deed as a small percentage of the value or, Sft area?? ) can be gifted to the children and i will continue to retain all control of the flat regarding giving out on rental, sale etc and without the requirement of the childrens' consent or signatures etc. Upon my death, The Hsg Society will demand to see the Will to corroborate the nomination. Nomination has alreadybeen furnished with them.The society always demands the Will to confirm/or overide the nomination. However, I do not wish to share the entire contents of my Will, which will contain matters extraneous to them. Only the relevant issue of future ownership/inheritance of my property needs to be shown to them upon my death. I want my privacy. The gift deed to my children, eg. 10% each, seemed a way to (1) ensure their inheritance and my privacy vis-a-vis the society and (2) only showing that portion of the Will which concerns the flat inheritance. Do i make a separate WILL or a Section 2 which singularly and exclusively pertains to my flat ? Further, will my children have to pay an inheritance tax ? What is the maximum fee that the CHS can charge when they do the transfer of ownership to my children , upon my death? Kindly advise. Thanks
Here is the advice provided by Mr Shirish Shanbhag, our expert from the Legal Resources Centre...

In order to smoothly transfer your flat in favour of your two sons after your death, and also to have full right on your flat during your life time (and also during your wife's life time), to give your flat on rent by your (or by your wife) and get its rent to you (or to your wife), without any hindrance from your sons, and also to get your sons equal share of your flat after both of yours death, I am giving you the following idea.

I presume that your flat is solely in your name. If this is the case, then I suggest that you make a gift deed, partially and conditionally, gifting your flat to your wife and to your two sons as below:

Gift 10% of your flat to each of your sons, and 40% of your flat to your wife, thereby you retaining 40% of your flat with you.

Put condition in the gift deed, that after the death of one of the two spouse, 10% share of the dead spouse will go to each son, and 20% will go to surviving spouse, thereby making major percentage of of flat (60%) to remain with the surviving spouse.

In this case, both the sons will not interfere with the surviving spouse, because surviving spouse's share in the flat is 60%.

Also, you put a condition in your gift deed, that right to give the flat on rent and also to receive the rent of flat, will vest on the last surviving spouse.
Put another condition that, after the death of last surviving spouse, its share will equally divide to both the sons.

By doing this type of gift deed, you will facilitate your spouse to give your flat on rent and to get the rent from your flat, even after your death.

If your spouse per-deceases you, then you will continue to get rent till your death. After your death, your share in the flat will equally go to your both the sons, thereby making each son 50% (equal) share holder of your flat.

Just by making one gift deed, you can gift your flat to your wife, and to your two sons.

From 1 April 2016, when gift deed is made in favour of spouse, children, grand children and widow of son, then, stamp duty is Rs200 and registration fee is also Rs200, irrespective of the value of the gift of immovable property.

By doing gift deed, as stated above, you will live peacefully and your flat will smoothly and equally distribute in favour of your wife and your two sons, without requiring intervention of your will and its probate, which is tiresome, time consuming and costly process.
Our Experts

Ameet Patel Ameet N Patel is a chartered accountant and former President of Bombay Chartered Accountants Society - BCAS

Subodh Shah CA Subodh Shah is a Fellow Member of the ICAI. A merit ranker throughout his career, he stood 3rd in CA Intermediate and 17th in CA Final. In addition he also got the prize of ICAI for scoring the highest marks in Direct Taxes at CA Final. He is practicing Chartered Accountant as well as a teacher for over 20 years.

Ameya Kunte Ameya Kunte is a Tax Professional, Chartered Accountant & Co-founder - Taxsutra.com

Nikhil Vadia CISA qualified Nikhil Vadia is a Chartered Accountant in practice since 1997

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Yogesh Sapkale Yogesh Sapkale is Deputy Editor of Moneylife and writes on financial and tax related issues

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