We have taken a home loan jointly (husband plus wife). After the completion of loan repayment, I want to gift my share of the property to my husband. We are jointly taking the loan for better interest rates. Please let me know the procedure for gifting the property to my husband after the completion of the loan. My husband only avails of tax benefits. I am a housewife. Please let me know if I gift my share of the property to my husband, would it lead to a tax burden upon him?
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Answer: One can gift only what one owns. I presume that you had paid for your part of ownership in the house property and your name was not added just for the sake of convenience.
For gifting your share in the house purchased, you will have to execute a gift deed and pay the stamp duty as applicable in your state. As per the provisions of the Transfer of Property Act, any gift deed of immovable property needs to be registered under the act. Your husband will not have to pay any tax on the value of the share in the house you are transferring now, as the gifts received from specified relatives including your spouse are not to be treated as income under Section 56(2) of the Income Tax Act. However, any income which may arise in respect of the gifted share in the property shall be added to your income year after year. This would include rental income year after year in case the property is let out and any amount of capital gains that arise on the sale of the property as and when the same is sold. Please note that the clubbing will continue even if the asset is converted into any other asset in the future.
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The clubbing provisions apply to income from your share of the property and not any income earned on investments made from the income from the share in the property.
Balwant Jain is a tax and investment expert and can be reached on [email protected] and @jainbalwant on social media platform X
