What property laws govern the acquisition and disposal of an immovable property by a minor? Also, what are the various income tax provisions for sale of a property owned by a minor?
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  • A minor can acquire an immovable by way of inheritance, either through a will or through the intestate succession law as per the his or her religion. A minor can also acquire an immovable property by way of gift although a minor is not competent to contract as per the Indian Contract Act, 1872. However, the Transfer of Property Act, 1882, allows a minor to accept a gift of an immovable property, without the intervention of his or her guardians.
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  • Thanks @Malvish What about registration? Can a minor legally sign a gift deed and carry on with the registration of the gifted property?
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  • @mmalhot A minor can sign the gift deed of immovable property but it is advisable that the gift is accepted by the natural guardian on behalf of the minor, to ensure smooth registration process devoid of any hassle.
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  • Thanks @Malvish What if the gift of an immovable property carries any liability or obligation? Can any liability of a gifted property be made binding on a minor?
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  • Any gifted property, if an onerous gift carrying some liability, cannot be made binding on a minor. However, if the minor accepts the onerous gift after becoming competent to contract, either expressly or by conduct, he cannot repudiate the gift later on.
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  • @Malvish Does that mean that a liability on a property cannot be forced on a minor? So the minor is not liable for existing liabilities?
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  • @mmalhot it means that a minor can choose not to accept such a gift but if he does then he cannot reject or return it on a later date.
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  • Ok, got it! Thanks! What about income factor? Does a property gifted to a minor count as an income?
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  • If a property gifted to a minor exceeds a value of Rs 50,000, the market value of such property may be treated as income of the minor, in the year in which the property is transferred. However, any property gifted by relatives such as parents, maternal and paternal uncles and aunts, as well as grandparents, is fully tax-free in the hands of the minor.
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  • Just to add, a minor can also acquire an immovable property out of his own funds. In such case the agreement for the purchase of the property has to be executed by the natural or legal guardian of the minor, as the minor is not competent to contract. Also, while acting on behalf of a minor, the guardian is expected to act in utmost faith, for the benefit of the minor.
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  • Thanks for sharing @movedin
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  • Does a minor have to pay income tax on a property owned by him or her, if yes then how is it calculated and what kind of tax benefits can be availed?
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  • If an immovable property is used by a minor or his/her family members for their own residence, no income is presumed to have been gained.
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  • Thanks @Malvish What about rent? If a minor rents out a gifted property, what will be the tax implications or benefits?
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  • A minor can rent out a property owned by him or her through the guardians and the rental income will be taxable after deduction of 30% of the rent received as standard deduction.
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