Gifts received from Adopted Child

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  1. VivekY

    VivekY New Member

    My grandfather passed away when my father was 6 months old. My great-grand father also passed away when my grandfather was infant. My great-grand father were the youngest of 3 brothers. The ancestral property was managed by my great-grand father's eldest brother and than his adopted eldest son. Now, in my father's generation it is managed by the adopted son's eldest living son.

    He is extending the courtesy to share the property with it's logical heirs. He is ok - if I find a buyer directly(he will sign off on the papers for sales) OR if I want to get it registered in my name(Registration cost is significant).

    My questions is -
    If I sell it off directly, will the earnings be considered black money as it will come from sales of an asset - which isn't in my name? And, should I choose first option?
     
  2. gaurav_kumar

    gaurav_kumar Well-Known Member

    If you sell off directly - the funds will be received in the name of the person in whose name the property is currently registered.

    And then that person will gift the funds to you.

    Gifts received from Family members are exempted from the levy of income tax.
     
  3. VivekY

    VivekY New Member

    Gaurav ji, I thank you for your reply. However, as the lineage broke - my uncle is son of adopted son. Would he still be considered as family member, legally? If yes, will he have to pay any tax for gift given to me?

    And, is the method of direct sales recommended instead of getting it registered first?
     
  4. gaurav_kumar

    gaurav_kumar Well-Known Member

    There are 2 options:-
    1. Either you sell it directly, or
    2. The property is transferred in your name and then you sell
    In 1st case - you will receive gift in the form of money and in the 2nd case - you will receive gift in the form of property.

    The tax implication in both the cases will remain the same as a Gift has been received from son of adopted son. (I'm assuming the property is currently registered in the name of your uncle who is son of adopted son)

    Now, we have to check whether the son of adopted son would be covered in the meaning of family as per the income tax act.
     
  5. gaurav_kumar

    gaurav_kumar Well-Known Member

    The people included in the definition of Family members applicable in this case has been mentioned here - http://www.charteredclub.com/gift-tax/

    Sadly, son of adopted son is not covered in the definition.
     
  6. gaurav_kumar

    gaurav_kumar Well-Known Member

    However, your uncle can transfer you this property as it is or pay you the money for the same by writing a will.

    Gifts received out of a will are not taxable irrespective of whether received from family member or non-family member.
     
    Last edited: May 1, 2015
  7. VivekY

    VivekY New Member

    Gaurav, thank you once again.

    I think I should engage with a consultant to discuss, decide and execute formalities of transfer.

    Like elagaan.com is available for business, is there any service to retain for individuals?
     
  8. gaurav_kumar

    gaurav_kumar Well-Known Member

    elagaan.com helps individuals as well.

    Alternatively, you can meet CA's as well in your area and meet them personally to take their advice.

    The list of CA's in your vicinity would be available on Justdial.com
     
    VivekY likes this.
  9. gaurav_kumar

    gaurav_kumar Well-Known Member

    You can also try vakilsearch.com
     
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