Can An NRI Gift Property Owned By Her Expired Parent ?
April 5, 2008 by taxworry · Leave a Comment
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Our mother died recently and left some immovable (building) property to her children. I as one of the beneficiaries would like to gift my share to my niece who also received part of the property. We have two units to be shared between three family members. My niece will keep one unit with my share gifted to her and the other unit will probably be sold to pay off the other family member, who wants cash.Can you help me understand the best way to accomplish? We are all NRIs here if that makes a difference. lakshmi, Banglore |
Your question has following issues
- Whether you are fit to gift?
- If yes, how income tax affect such gift?
- Since you are NRI , whether Foreign Exchange Management Act allows gift of immovable property?
Whether you are fit to give gift?
The owner of the property was your late mother. So , you can gift the property only if you are the owner of the property. In case of your mother’s death , you can become owner in following ways
- Your mother left a will where your share has been stated therein. In this case , you will have to apply for probate in the local court.
- Your mother died intestate , in that case also you and all other claimants have to apply to court under Hindu Succession Act for succession certificate.
Thus you become fit to give gift.
Taxation Issues
As far as gift is concerned , since it will be to your relative, there will not be any tax on such gift either on donor or donee. However , your plan to sale one unit and then distribute cash is not very good planning because in that case the capital gains income may arise in the name of late mother. That will make the heirs liable to file return and pay tax under section 168 of the I T Act.It is better if the immovable property is sold by individuals who get it. Let then sell it individually , that will make les complexity and will have less tax burden as the income will get shared.
FEMA applicability?
Since you are NRIs , foreign Exchange management comes into play. However, gift of immovable property by an NRI to an Indian resident is allowed by RBI . Read question 3 and 4 of RBIs FAQ here.
In the end I suggest you take help of a good civil lawyer who deals in property
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