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Transfer of property

CA Ankur Agarwal (CA) (110 Points)

25 June 2016

A Brother wants to transfer a mortgaged property which is under his name,and In which Rs20 lacs is still outstanding,the said property is to the transfered to his Sister.

Now I want to know, How will all this become possible? and what are the tax implications (if any).

-Thanks In Advance.

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Harshit Kabra (INVESTOR) (Student CA final) (1113 Points)
Replied 25 June 2016

"IT WOULD BE AN ONEROUS GIFT." Section 127 of the Transfer of property deals with gifts called " Onerous " A gift can not be complete unless donee accepts the gift.So it is donee wish he/she accepts an onerous gift or not.By phrase Onerous gift we mean gift of a property with some obligation ,or gift of an encumbered estate.When donee accepts such a gift ,he/she also accepts the burden imposed on the gift. For a mortgaged property the possession from donor to donee passes in symbolic manner,for a mortgagor has always right to redeem his property and on acceptance of gift this right of redemption passes on to the donee. Ask the bank to read section 127. A gift is a complete instantaneous transfer and get completes then and there,hence there can be claims from sister's husband if she married.

hope this will help u.

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CA Ankur Agarwal (CA) (110 Points)
Replied 25 June 2016

Thanks & very well explained but this doesn't help me.
A transfer of property from brother to sister is exempted for sure hence no tax liability on both sides.

Now my question is this, can the brother transfer the property which is still under mortgage to his sister?

Does anyone know the procedure & does Bank has to interfear in this?

Harshit Kabra (INVESTOR) (Student CA final) (1113 Points)
Replied 25 June 2016

brother has no right to transfer the property which is mortgaged under name of his sister.
it is the ultimate choice of sister wheather she wanna to do such transfer.
if sister is died , then her legal guardian has an opt to transfer such to anyone
ur answer, is no - As brother is not the owner.

CA Ankur Agarwal (CA) (110 Points)
Replied 25 June 2016

You are not getting my question it seems,lemme break it down.

The brother is the owner of the property which is mortgaged under his own name.

He wants to tranfer the said property to his sister.

Now my question is this, can the brother transfer the property which is still under mortgage to his sister?

Harshit Kabra (INVESTOR) (Student CA final) (1113 Points)
Replied 25 June 2016

ys bro he can..
but sister has to accept all the burden and liability falling with such property.

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CA Ankur Agarwal (CA) (110 Points)
Replied 25 June 2016

All right then.

CA. Sunil Gokhale (Teacher) (1484 Points)
Replied 12 July 2016

Brother can definitely transfer a mortgaged property to his sister or to anyone else for that matter. The bank will transfer the loan to the transferee's name provided the sister (or other transferee) is eligible for the amount of loan for which she should have sufficient income. Otherwise, the loan has to be paid off before transfer. If sister does not have sufficient income but is married then the options are: (1) transfer to joint names of sister & spouse (confirm with bank who should be first holder) if the spouse is eligible for loan (2) sister's spouse pays off the loan and the property is transferred to sister alone.

@ Harshit: While you are right about onerous gifts, if the sister signs the gift deed then it is clear that she accepts it with the liability.