In India any one can actually exchange his/her property with relatives, friends, neighbours. The exchange of property need not be in the same city alone, but any part of the country.
As per section 118 to 121 of the Transfer of Property Act, 1882, when 2 persons mutually transfer the ownership of one immovable property for the ownership of another, without the involvement of sale through money, it is called an exchange of property.
Before getting into an agreement for exchange, both parties involved in the exchange need to frame a deed of exchange. This deed is similar to as usual sale deed. Besides the normal details of a sale deed, an exchange deed also mentions the provisions of penalty against any fraud and the date of exchange.
The exchange can be implemented by either one deed for both properties or by execution of two separate documents for the properties. However, the former practice of making a single document is more common.
In general, no two properties can have the same market rate. Therefore, the value of each property is mentioned in the deed of exchange at the time of signing. At the time of exchange, the owner of the property that has lower value pays the difference to the owner of the property with the higher market value. This difference is also mentioned in the deed. However, there is a room for negotiation in such deals, too.
Any transaction involving exchange of property in India worth Rs. 100 or more is required to be executed in writing. The deed of exchange is registered under the Indian Registration Act, 1908 after payment of the stamp duty on the transfer, as per the applicable rates.
Once the deed is executed, the rights over the property and its title also gets transferred to the respective parties. Where foreign exchange is involved in transaction of exchange, the laws applicable to FEMA apply.
The benefit of going for a property exchange is the saving of taxes on the transaction as no money is involved in it. The property could be commercial or residential or retail.
Transfer of Property Act
As per section 118 to 121 of the Transfer of Property Act, 1882, when 2 persons mutually transfer the ownership of one immovable property for the ownership of another, without the involvement of sale through money, it is called an exchange of property.
Before getting into an agreement for exchange, both parties involved in the exchange need to frame a deed of exchange. This deed is similar to as usual sale deed. Besides the normal details of a sale deed, an exchange deed also mentions the provisions of penalty against any fraud and the date of exchange.
The exchange can be implemented by either one deed for both properties or by execution of two separate documents for the properties. However, the former practice of making a single document is more common.
Negotiation
In general, no two properties can have the same market rate. Therefore, the value of each property is mentioned in the deed of exchange at the time of signing. At the time of exchange, the owner of the property that has lower value pays the difference to the owner of the property with the higher market value. This difference is also mentioned in the deed. However, there is a room for negotiation in such deals, too.
Any transaction involving exchange of property in India worth Rs. 100 or more is required to be executed in writing. The deed of exchange is registered under the Indian Registration Act, 1908 after payment of the stamp duty on the transfer, as per the applicable rates.
Once the deed is executed, the rights over the property and its title also gets transferred to the respective parties. Where foreign exchange is involved in transaction of exchange, the laws applicable to FEMA apply.
Benefit of property exchange
The benefit of going for a property exchange is the saving of taxes on the transaction as no money is involved in it. The property could be commercial or residential or retail.
No comments:
Post a Comment