Property can’t be agricultural land or farmland if acquisition is by an NRI through a sale-purchase.

Q. I have three children and want to divide my property equally among them. One of my children is now a citizen of the US. Will it be valid to transfer the property to his name?

Expert Comment: While answering this query, we are assuming that your child (who is now a citizen of the US) is a non-resident Indian (NRI).

As per the current foreign exchange regulations prevalent in India, an NRI can acquire immovable property in India either by way of purchase, gift or inheritance, and the said immovable property can either be residential or commercial. However, the property cannot be agricultural land, plantation property or farmland if the acquisition is by an NRI through a sale-purchase or a gift. This restriction will not prevent an NRI from inheriting agricultural land, plantation property or farmland; however, there are certain restrictions imposed on an NRI with respect to dealing with such type of property once inherited.

Subject to the aforesaid, you may either divide the property, equally among your three children by selling the property to them, gifting it to them, or by making a will and bequeathing your property to them. The sale or gift would take place during your lifetime but if you have made a will, then such property will vest in your children after your death.

If you want to sell your property, you will have to execute a sale deed in favour of your children and there needs to be some consideration paid by them to you. The said sale deed needs to be appropriately stamped.

Section 17 of the Registration Act, 1908 lays down the documents which are to be compulsorily registered. Section 49 of the Registration Act, 1908, inter alia states that the transfer of immovable property vide an instrument required by section 17 or by any provision of the Transfer of Property Act, 1882, to be registered shall not take effect unless such document has been registered. A sale deed is a compulsorily registerable document as per the provisions of the Registration Act, 1908 and thus the same will be required to be registered with the sub registrar of assurances.

If you want to gift the property to your children, you will have to execute a gift deed in their favour, which will need to be executed by you and them. You may execute one consolidated gift deed or individual gift deeds in favour of each child. For a gift to be considered valid it is made voluntarily; it must be without consideration, there has been an offer by the donor (i.e. you); the offer has been accepted by the donee (i.e. your children), and the donee actually accepts the gift.

The gift deed must be adequately stamped. While there would be certain stamp duty benefits in gifting the property to your children, check with your chartered accountant/tax consultant its tax implications. A gift deed is also a compulsorily registerable document.