Introduction:
Investing in real estate is a significant decision that often involves complex legal considerations. One scenario that may arise is the desire to purchase property in a minor’s name. While this can be a strategic move for various reasons, it requires a nuanced understanding of legal processes and safeguards. In this article, we explore the feasibility and considerations associated with buying property in a minor’s name.
When is a minor able to take ownership?
A minor can only acquire ownership of property through gift, as per the Transfer of Property Act 1882. It will not be possible for the parents or guardians to get involved in this. A minor may sign a gift deed as a donee in this situation.
A minor cannot sign a deed or contract according to the Registration Act of 1908. For a minor to be able to legally sign a contract and acquire property ownership, they must turn 18 years old.
Can a Minor buy a property?
A property may only be purchased in the name of a minor if it is given to them as a gift. The kid will not be obligated or qualified to care for the gifted property, even if he will be its legal owner. He can take over and manage the property on his own once he is competent enough.
Through the use of his funds, a minor can also purchase real estate in his name. In this regard, the minor’s parents or guardians will sign the agreement, sale deed, or other pertinent document. When signing a deed, the guardian and/or parents must uphold the highest moral standards.
How to register a property under the name of a minor
There are various processes involved in registering property in a minor’s name. The following is a step-by-step instruction that explains how to register a property in a minor’s name:
Step 1: It is imperative that you fully research the property’s history before transferring ownership to a minor. This involves determining whether there is a property dispute or an ongoing lawsuit regarding ownership. It is also crucial to confirm that the property is free of liabilities and that all invoices, taxes, and other obligations have been paid in full. While not required for registering a minor’s property, this step is important and frequently
Step 2: The following action after registering a property in a minor’s name should be documentation. This comprises the property agreement, title deed, survey records, information about the existing owner, property tax payment receipts, and other legal documents needed to buy real estate.
Step 3: The property should be transferred to the minor’s guardian in the first instance, and later to the minor itself. Stamp duty must be paid at this stage for each registration. It is common for a minor to be listed as an owner on the purchase paperwork. However, it can be done under guardianship, in which case the guardian will also provide all supporting paperwork and signatures.
Step 4: Visit the sub-registrar’s offer to complete the registration process once the stamp duty has been paid. You must provide the property deed paperwork, two witnesses with their separate identity documents, and passport-sized photos, just like you would with any other real estate acquisition.
Note: Depending on several factors, registering a property in a minor’s name may involve different steps. Therefore, before moving further, it is strongly advisable to speak with a legal counsel to learn about the procedure for registering property under a minor’s name.
Tax on Minor’s Property
Indian income tax laws limit the number of properties that a minor may possess to two. In such cases, the tax part will not be applied, and he will be allowed to appreciate the property gains.
There is no tax on the proceeds from the donated property that the youngster and his family use. A typical 30% reduction in the rental price is due when a property is rented out under a guardian’s supervision.
Purchasing property in the name of a minor is only permitted if the property is donated or paid for with money belonging to the minor. The guardians or parents take care of it.
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.Written by: Avichal Singhal Adv