Understanding Property Distribution Without a Family Partition Deed

A 45-year-old reader with a brother and a sister seeks clarity on how their parents' properties will be divided in the absence of a notarized family partition deed. Our experts provide insights into the legal implications and asset distribution.

Property DistributionFamily Partition DeedSuccession LawsCapital Gains TaxInheritanceReal EstateDec 23, 2025

Understanding Property Distribution Without a Family Partition Deed

Real Estate:I’m 45 and have a brother and a sister. Our family partition deed, signed in 2011 by me, my father, and brother, was not notarised and the original is lost. My sister was not given a share. A house and commercial property in Ahmedabad are in my mother’s name, though they were financed by my father and he collects the rent. My father owns another house in our village in Maharashtra, where my parents live now. I’m not sure under whose name the agricultural land there is registered. I would like to understand: if my mother passes away first, how will these properties devolve? And if both parents pass away, will the ownership go solely to my brother or be shared equally between us?

Due to the lack of a family partition document, the succession laws will navigate the asset distribution post-demise. If your mother dies before your father, the Ahmedabad house and the commercial property in her name will be divided into 1/4th shares each to your father (surviving spouse) and the children, i.e., you and your siblings. With regard to the agricultural land in Maharashtra, the distribution depends on who is the owner. If your father is the sole or part owner, and he dies after your mother, his share will be divided into 1/3rd shares each among you and your siblings. If your father dies before your mother, his share will be divided into 1/4th shares each to your mother and the three children.

In case both parents die simultaneously, according to the provisions of Section 21 of the Hindu Succession Act, 1956, it is presumed that the elder person died first followed by the younger person, until proven otherwise. Hence, asset distribution will be done accordingly.

Can I use the sale proceeds from my own house to pay my sister her 50% share in our father’s property so that the entire property can be transferred to my name? We are the only two legal heirs. In such a case, can I claim exemption from capital gains tax on the sale of my property, since the money will be reinvested in acquiring another property?

One sibling compensating the other and obtaining full ownership is treated as a family arrangement through a release or settlement deed. This is viewed as a relinquishment of inherited rights, not a commercial purchase. For exemption under Section 54 of the Income Tax Act, the reinvestment must be in the purchase or construction of a residential property. This requires a clear, independent purchase transaction, registered sale deed, and transfer of title. A family settlement where you already own 50% of the inherited house and are acquiring the remaining share from your sister may not amount to purchasing a 'new' property. A recent Income Tax Appellate Tribunal ruling (Kavita Manoj Damani) allowed Section 54 where the assessee sold her flat and bought another from her husband. The tribunal accepted it because it was a genuine sale, executed through a registered purchase deed, with proper money trail, stamp duty, and TDS, and the property purchased was clearly a separate, new asset.

Frequently Asked Questions

What happens if a family partition deed is not notarized?

If a family partition deed is not notarized, it may still be considered valid if it is executed properly and all parties agree to its terms. However, notarization adds an extra layer of legal validity and can help in resolving disputes.

How is property divided if a parent dies without a will?

In the absence of a will, the property is divided according to the succession laws of the state or country. For Hindus, the Hindu Succession Act, 1956, governs the distribution, typically dividing the property equally among the surviving spouse and children.

Can I buy out my sibling's share of inherited property?

Yes, you can buy out your sibling's share of inherited property through a release or settlement deed. This is treated as a family arrangement and not a commercial transaction. However, for tax purposes, it must be a clear, independent purchase with a registered sale deed and proper transfer of title.

What is the role of the Hindu Succession Act, 1956, in property distribution?

The Hindu Succession Act, 1956, governs the distribution of property among Hindu, Sikh, Jain, and Buddhist individuals. It outlines the rules for succession, including the shares that surviving family members are entitled to receive.

Can I claim capital gains tax exemption when reinvesting sale proceeds?

Yes, you can claim capital gains tax exemption under Section 54 of the Income Tax Act if the sale proceeds are reinvested in the purchase or construction of a residential property. The reinvestment must be in a new property, with a registered sale deed and proper transfer of title.

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