Hi! My father had purchased a flat in Chennai in 1996. Upon his demise in 2001, my mother, sister, myself and my paternal grand mother ( who was surviving then) became the legal heirs and we have a legal heir certificate issued accordingly. My grandmother passed away few years later and her death certificate is available. The flat continues to be in father's name till date and all property taxes are being paid by us. We now intend to sell the property and share the proceeds between my mother , sister and myself. I seek your guidance on the below: 1) Can we , the surviving legal heirs, sell the property directly to any buyer or should we first transfer the title to one of us and then sell the property? 2) My mother is a family pensioner and sister & myself are salaried working professionals. What would be the most tax efficient way of structuring this transaction, if both the options listed in question 1 above is permissible? i.e can this be structured as 'Gift' in the hands of myself and my sister? Thanks in advance! Regards Suresh
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Hi Suresh!
The most cost efficient way would be to get a relinquishment deed executed in favour of 1 out of you all 3, as gift deed would cost you unnecessary payment of stamp duty. After that is done, you may go ahead with the sale of the property. A well drafted deed by an expert advocate is advisable.
You should first transfer property in name of legal heirs then only sell the property
2)mother can execute gift deed for her share of property in your name and sister name
1. yes but firstly mutation is required to be carried.
2. No. property stand to be inherited property.
Dear Client,
In the Present Scenario, your father purchased a flat in Chennai, in 1996. Upon his demise, in 2001, you, your mother, your sister, and your paternal grandmother, had become the legal heirs and further, you have a legal heir certificate issued for the same. Your grandmother passed away few years later, and her death certificate is also available. The flat continues to be in her father's name till today, and all property taxes are being paid by you. You now wish to sell the property, and share the proceeds between your mother, sister and yourself. Herein, as the surviving legal heirs, you may sell the property directly to a buyer without transferring the title to any one of you. However, it is significant that, you ensure all the legal heirs are in agreement for the same. For this, you would require a NOC, and a legal heir certificate as well. With respect to structuring the sale, you may go for a direct sale, but would incur capital gains tax on the sale proceeds you earn. Further, if you choose to make the sale as a gift from your mother and your sister, you may incur tax if the proceeds are more than Rs. 50,000.
Hope you find this answer beneficial for resolving the dispute.
1. The surviving legal heirs can directly sell the property directly. There's no need to transfer the title to one of the legal heirs for selling the property.
2. In that case, first you and your sister may execute a registered Release/Relinquishment Deed in favour of your mother. After this your mother becomes absolute owner of the property . Subsequent to this, let your mother execute a registered Gift Deed in favour of you and your sister to enable most efficient way of tax structuring.
1. You should mutate the property in your names first keeping in mind to include the names of other legal heirs of your paternal grandmother, since deceased, like her other sons and daughters, if any, as the share holders of her share of the said property. Thereafter you all can jointly sell the said property directly to tjhe buyer.
2. This is an inherited property and you did not make any capital gain or increase in income as the property which already belonged to you due to inheritance has been sold by you and for this there may not be any I.Tax to be deducted on the said sales proceeds. However, get this part of the advice clarified by an I.Tax specialist.
Selling the Property: As surviving legal heirs, you can directly sell the property without first transferring the title, provided all heirs agree and a NOC is obtained. The legal heir certificate and your grandmother’s death certificate will be required.
Tax Efficiency: To minimize tax, one option is to execute a Relinquishment Deed by you and your sister in favor of your mother, making her the sole owner. Then, your mother can execute a Gift Deed to transfer the proceeds to you and your sister, which may reduce tax liabilities.
For detailed, personalized advice, consider a phone consultancy.
Hope you find the information helpful. You are free to contact me for further discussion.If you could spare two minutes of your time to write a review, It would be really grateful and very happy to read it.
Thank you.
Shubham Goyal
1. Since, you have already Legal heir certificate , then you can apply for mutation of the property in the name of surviving legal heirs after submitting the death certificate of grandmother.
- If you all will transfer respective share in the name of one member , then you will have to registered a relinquishment deed in his name and then also mutation is required.
- Hence, better apply for mutation in the names , and can sell the property.
2. Gift should also be registered
1. If all the legal heirs are cooperating with each other then you all can execute a joint registered sale deed in favour of the prospective buyer.
2 This is an inheritance on all of you, hence while selling the property all the sellers are subject to pay long term capital gains tax.
no need to transfer the property in-between the family members. as per indian succession act the proeprty of the deceased will automaticlly devoles upon the legal heirs equally.
Since each situation is unique, consulting a tax professional or financial advisor can help you determine the most tax-efficient way to structure the sale and distribution of proceeds based on your specific circumstances.
Not necessary to transfer the title. All surviving persons can sign the sale deed in case if you intend to sell the property.
G.Rajaganapathy
Advocate
High Court of Madras.
All the surviving heirs can sell directly to buyer
