Property acquisition can be quite intimidating, considering the costs that the buyer has to bear. In big cities, in fact, a majority of people have to take home loans from banks, to buy properties, as its cost may run into crores of rupees and one may not be able to afford it, without housing finance, especially for those earning a monthly salary. However, apart from all the obvious benefits that a house offers to its owner, there are some additional benefits that only the owners of self-acquired properties enjoy. Property that you inherit will not offer the same benefits. Any property that you acquire with your own money, would qualify as your self-acquired property, as opposed to ancestral property, that you inherit.
See also: How is self-acquired property divided among the owner’s legal heirs?
Key features
Here is everything you should know about the ownership, sale and transfer of self-acquired property:
Ownership
As the sole owner, you have an exclusive right over your property. Your share in an ancestral property always decreases, with the birth of new members in the family. The same is not true of self-acquired properties, as your ownership in it remains constant.
Sale
As the owner of a self-acquired property, you decide when you want to sell it. In case of an ancestral property, the consent of each member in the joint family is needed, to proceed with the transaction. Also, in case even a single family member raises an objection to the sale, the deal may fall through.
Transfer
Unlike an ancestral property, you are free to give your self-acquired property to anyone you wish to. The ancestral property will pass on from the father to the son. In case of a self-acquired property, however, the father can transfer the property rights to anyone he wishes to.
Self-acquired property vs ancestral property
The first step towards understanding the benefits of self-acquired property is knowing how it is different from ancestral property.
Key differences
| Criteria | Self-acquired property | Ancestral property |
| Origin and ownership | Acquired during an individual’s lifetime through own efforts, resources or inheritance from sources apart from ancestors. | Also known as coparcenary property; refers to property inherited through male lineage of ancestors up to four generations. |
| Control and disposition | Owner has complete rights of management, use, sale, gifting, disposition or transferring by will after death. | Subject to specific rules under applicable legislation (such as the Hindu Succession Act) regarding management and disposition rights; coparceners can claim right while the property remains undivided until any coparcener legally demands a division. |
| Inheritance and succession | In absence of a will, the property is inherited by legal heirs like spouse or child depending on the family structure and applicable legislation. | Equal share and rights for coparceners by birth unless legally excluded; each coparcener to receive their entitled share upon partition, if demanded. |
| Characteristics | Not subject to strict rules of joint ownership or lineage-based succession due to independent acquisition by the owner. | Characterised by lineage-based ownership and joint inheritance subject to specific rules under Hindu Succession Act. |
| Inclusions | Property acquired through purchase, gifts, inheritance from relatives apart from parents, grandparents or siblings, employment or business earnings or any other lawful means. | Any property jointly owned by all coparceners, no single individual owner. |
Legal implications
| Criteria | Self-acquired property | Ancestral property |
| Division | Can be disposed of or distributed solely according to the owner’s wishes. | Can only be partitioned among coparceners. |
| Legal disputes | Revolve around testamentary capacity or interpretation of wills. | Involve complexities regarding ownership rights. |
Ownership benefits
Owning self-acquired property comes with several benefits free from the baggage of collectivism promoted by ancestral property. Here are a few such benefits:
Absolute ownership and control
Self-acquired property is free from the restrictions imposed by rules of joint ownership or inheritance, giving the owners complete control over its management and usage. They are free to sell, lease, gift or bequeath the property during their lifetime in whatever manner they like.
Flexibility in use and development
Owners have the flexibility to develop the property, make improvements or change its usage pattern as long as it follows prescribed zoning laws. Usage of property is subject solely to the owner’s needs and preferences under a legal framework.
Asset protection and privacy
Since the property is considered separate from family or ancestral assets, the amount of protection entitled to it in legal and financial matters is greater. It remains shielded from claims and liabilities arising from familial or ancestral disputes.
Estate planning and inheritance
Avoiding potential disputes among heirs and ensuring smooth transfer of assets becomes easier with self-acquired property, Owners can plan their estate more efficiently and draft a will specifying the manner of inheritance, ensuring their wishes are legally enforceable.
Financial security and investment
A valuable financial asset, self-acquired property can be leveraged for loans, mortgages or other financial instruments to generate income or fund ventures. The potential for appreciation of market value also guarantees long-term financial security.
Tax benefits
Ownership of self-acquired property might make you eligible for deductions on mortgage interest payments, property taxes or depreciation expenses, subject to local tax laws. This can significantly reduce taxable income or capital gains.
FAQs
What is the key difference between self-acquired and ancestral property?
While self-acquired property is owned and controlled solely by the individual who acquired it, ancestral property is owned jointly by coparceners with management and disposition subject to specified laws.
What are the legal implications of dividing ancestral property as opposed to self-acquired?
Ancestral property can only be partitioned among the coparceners, unlike self-acquired property, that can be disposed of or distributed according to the owner’s will.
How does ownership of self-acquired property affect estate planning and inheritance?
Self-acquired property allows for more convenient estate planning and minimises potential disputes since the owner has full rights of management.
What are the tax benefits associated with owning self-acquired property?
Ownership of self-acquired property might come with benefits such as deductions on mortgage interest payments, property taxes and depreciation expenses.
How does owning self-acquired property enhance financial security?
Self-acquired property is a valuable financial asset that can be leveraged for loans or investments, contributing to long-term financial security.
What are the differences in flexibility of use of self-acquired and ancestral property?
While ancestral property might have restrictions on flexible usage due to joint ownership, owners of self-acquired property are free to develop it according to their needs and preferences.
What protections does self-acquired property offer against familial disputes?
As self-acquired property is considered separate from ancestral assets, it provides greater legal protection against claims and liabilities arising from familial disputes.
| Got any questions or point of view on our article? We would love to hear from you. Write to our Editor-in-Chief Jhumur Ghosh at jhumur.ghosh1@housing.com |
