Looking to gift your wife an apartment this Valentine’s Day? Remember these tips

A brand new flat for your wife this Valentine’s Day? Opt for a completed project rather than an ongoing one. Make sure a gift deed has been signed by the husband and attested by at least two witnesses. (Picture for representational purposes only)

A brand new flat for your wife this Valentine’s Day? Some may consider the proposition a bit too extravagant but the gifting idea may just be ideal for husbands with deep pockets. But before richie rich husbands get carried away, here are a few things they should keep in mind.

Completed or under construction apartment?

Opt for a completed project rather than an ongoing one. By purchasing a flat after the occupation certificate is issued, you can save yourself the burden of giving away 5% as Goods and Services Tax (GST).

Who will be liable to pay tax?

If a husband gifts a property to his wife, the value of the property is not taxable in the hands of the wife. The cost and the holding period gets substituted in the hands of the wife. However any income arising from the property such as rental income can be clubbed with the husband’s income, said Sonu Iyer, partner, People Advisory Services (tax) EY India.

What you should know about gift deeds, stamp duty and more

Gifting a property to your wife is a thoughtful idea of providing your spouse with financial security.

“However, while making such a transfer, the thing to be kept in mind is that it has to be effected by way of an written instrument (gift deed) that has been signed by the husband and attested by at least two witnesses,” explains Mona Dewan, Managing Associate, ZEUS Law Associates.

The gift deed needs to be registered at the sub-registrar’s office and applicable registration charges and stamp duty will have to be paid prior to registration.

A few states have notified relaxations in stamp duty. For instance, Haryana offers an exemption on stamp duty if the property is transferred to the spouse, she says.

In the state of Maharashtra, the applicable stamp duty payable if a husband gifts a residential or agricultural property to his wife is ₹200 (Rupees Two Hundred only).

The Uttar Pradesh government recently limited the maximum stamp duty payable on a gift of a residential or agricultural property from a husband to his wife to ₹5000.

Before the reduction came into force, the stamp duty chargeable in Uttar Pradesh on transfer of a property between family members or blood relations attracted a stamp duty of 7 percent of the value of the property or 7 percent of the circle rate of such immovable property, whichever was higher.

However, a restriction has been imposed in case the property is received through a gift deed and subsequently gifted by the recipient within five years from the date of registration. This means that if the property received through a gift deed is subsequently gifted by the recipient within five years from the date of registration, then the reduced stamp duty benefit will not be available, explains Dewan.

However, in Delhi there is no such exemption and the stamp duty payable on a gift deed from husband to wife is 2% of the circle rate value of the property plus applicable transfer duty levied by Municipal Corporation of Delhi and registration charges thereon, she says.

What if a wife decides to gift an apartment to the husband?

It is pertinent to mention here that similar exemptions are applicable in Haryana, Maharashtra and Uttar Pradesh in case a wife decides to gift an immovable property to her husband.

It should be remembered that in Delhi the stamp duty payable on a gift deed from a wife to her husband will be 3% of the circle rate value of the property plus applicable transfer duty and registration charges.

Remember the gift deed is irrevocable

It is also important to be aware that once the property is gifted by the husband to his wife by way of a validly executed registered gift deed, it is irrevocable and the transfer by way of gift is complete and binding. This means that the donor/ husband does not usually have the right to revoke/cancel such a gift already made and the donee/wife becomes the owner of the gifted immovable property, adds Dewan.

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