Manoj Kumar gifted his sister Swati Kumar a 2 BHK property in Mumbai. Swati, being a blood relative, Manoj Kumar executed the gift deed by paying a stamp duty of Rs 200 and got the document registered by paying 1% of the property value as registration fee. Swati, who hardly visits Mumbai, wanted to sell the property but her biggest question is whether it is legitimate to sell the property she has received as a gift. Many people, like Swati, are confused about the rightfulness of selling a gifted property. In this article, we discuss whether it is legal to sell a property received through the execution of a gift deed. Read on to learn more.
See also: All about gift deed stamp duty and registration charges in India 2025
What is a gift deed?
When a person wants to gift his property to another person, the transfer of ownership of the property can be done by executing a legal registration agreement known as a gift deed. The person who executes the gift deed and gifts the immovable property is known as the donor, and the person who receives the gift is known as the donee. Similar to a sale deed, once the gift deed is executed, it cannot be revoked unless it is proven that the gift deed was executed under forceful circumstances.
What is the validity of a registered gift deed?
A registered gift deed is valid forever unless there has been any dispute and the donee was proven to be guilty of aiding the donor in revoking it. In such a case, ownership of the property goes back to the donor.
According to the Transfer of Property Act 1882, a gift deed is valid if:
- The property mentioned in the gift deed exists when the gift deed was executed.
- The gifted property was done without any consideration.
What is the capital gains tax to be paid on sale of the gifted property?
If the property that was gifted was held by the donee for more than two years, then long-term capital gains (LTCG) will be considered. If the gift deed was executed before July 23, 2024, then the LTCG can be paid either at 20% with indexation charges or at 12.5% without indexation charges.
See also: Gift deed format in India in 2025
How is the LTCG Calculated?
The LTCG will be calculated on the basis of the net sale of the property minus the cost of acquiring the property and improving it. Since this is a gift, one cannot know the price of acquiring the property. In this case, the acquiring price is the price at which the donor bought the property.
Can a donee sell the property received as a gift?
A gift deed registered under a donee’s name and has no clauses of ‘no sale’ attached can be easily sold. The gift deed acts just like a sale deed as it has the receiver’s name, and the donee can sell it to anyone of their choice, as the property is now in their name.
What are the documents required to sell a gifted property?
Here are the documents required to sell a gifted property:
- Original gift deed
- Original sale deed of the property
- Property title deed
- Donor and donee details
- PAN card details of seller and buyer
- Aadhaar card details of seller and buyer
When can a donee not sell the gifted property?
If there is any clause mentioned in the gift deed stating that the donee cannot sell the property they received as a gift for five years, 10 years, or never, then it is illegal for the donee to sell the property. In such a case, if the donee sells the property, the donor has the right to revoke the property from the donee. Thus, the person who may have bought the property without due diligence will be a victim of fraud.
Another scenario is that if the donee sells the property even when the donor has mentioned a clause in the agreement, and the third party, during due diligence, comes to know of this, they can annul the deal by proving fraud in court.
See also: Gift Deed 2025: Registration, format, stamp duty and documents required
Things to know before purchasing a gifted property
Due diligence while selling a property is as important as buying one. This is because there are many rules and regulations associated with selling certain types of properties. Both the seller and the buyer should be well-informed about these legalities to ensure a smooth transaction and avoid any future disputes after the property sale is completed.
When a buyer buys a gifted property, they should ensure the following to avoid becoming a victim of fraudulent property transactions:
- The gift deed property can be sold if only all legal provisions are followed.
- The gifted property that is on sale should be registered under the Registration Act 1908 (Sec 18) through a sub-registrar. Only if the property is registered can it be sold.
- The stamp duty of the property should have been paid by the donor at the time of gift deed execution so that the buyer doesn’t face any risk of revocation of property.
- The gift property being purchased should have all proper documents, and there should be no conditions mentioned in the form of clauses that will affect the buyer, who is the third party.
For a buyer, it is recommended to check the transfer, selling, or gifting of the property and how it can be used fairly in the registered property documents. It is also recommended to check the encumbrance certificate of the property to ensure there are no legal disputes involved.
What are the clauses that state the donee shall not sell the gifted property?
- If the gifted property is not registered, a donee cannot sell it.
- If the gift deed has a clause that highlights that the deed cannot be manipulated or sold by the donee and, if done, it will be restored to the donor, the donee cannot sell the property. In this case, the donee can take legal advice to understand if this is valid under section 126 of the Transfer of Property Act.
Housing.com POV
Even if an immovable property is gifted, the donee has the right to sell it, as it is registered under their name. The only point where due diligence is needed is that if the donor and the donee have agreed on a ‘no sale’ clause and that has been incorporated in the gift deed, then as long as the donor does not withdraw that clause, the property cannot be sold.
FAQs
Can a gifted property be sold immediately by the donee?
Yes, if the gifted property is registered and there are no conditions attached, it can be sold immediately.
Can you revoke a gift deed?
According to section 126 of the Transfer of Property Act 1882, one can revoke the gift deed if the conditions mentioned by the donor are not fulfilled, and the donee was involved in fraudulent activities, which can be proved.
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