An asset that cannot be relocated from one location to another is classified as immovable property. In the real estate market, immovable property encompasses residential homes, warehouses, industrial units, and factories. The various types of immovable property include:
- Residential property such as houses and flats.
- Commercial property like shops and offices.
- Industrial property like factories and other industrial buildings.
- Agricultural land used for farming purposes.
What is immovable property?
Immovable property refers to assets that are inherently stable and cannot be moved without altering or damaging their substance. These assets include land, buildings, and anything permanently attached to the earth, such as trees and structures. Unlike movable property, which encompasses items like vehicles, furniture, and personal belongings that can be transported, immovable property remains fixed in one location. The permanence of immovable property provides stability and security, making it a valuable asset for investment and legal purposes.
Understanding the characteristics and types of immovable property is crucial for property owners, investors, and legal professionals. This knowledge helps in making informed decisions regarding property transactions, ownership rights, and the potential for value appreciation. Moreover, immovable property often comes under specific legal regulations that ensure clarity in ownership and transfer processes, adding an extra layer of protection for property holders.
Some examples of immovable property
Understanding what constitutes immovable property is key for investors and legal professionals. Here are some common examples:
- Land: The most basic form of immovable property, land forms the foundation of all real estate transactions.
- Buildings and structures: Houses, commercial buildings, and industrial structures are immovable due to their permanent attachment to the land.
- Fixtures and fittings: Items that are permanently attached to a building, such as plumbing installations, electrical systems, and built-in cabinets, are also considered immovable.
- Trees and plants: When planted in the ground, trees and long-term plants become part of the immovable property as they are attached to the soil.
Features of immovable property
Immovable property has distinct features that differentiate it from other asset types:
- Permanence: Unlike movable assets, immovable properties remain fixed in one location, providing stability and security.
- Appreciation: Over time, immovable properties often appreciate in value, making them a sound investment.
- Legal regulations: Immovable properties are subject to specific legal frameworks and regulations, ensuring clarity in ownership and transactions.
- Durability: Built to last, immovable properties generally have a longer lifespan compared to movable assets.
- Utility: These properties can be used for various purposes, including residential, commercial, and agricultural activities.
Different types of immovable assets
Immovable assets come in various forms, each serving different purposes, and offering unique benefits:
- Residential properties: These include homes, apartments, and other living spaces.
- Commercial properties: Office buildings, retail spaces, and warehouses fall under this category.
- Agricultural land: Used for farming and related activities, agricultural land is a vital immovable asset.
- Industrial properties: Factories, plants, and industrial complexes are essential for manufacturing and production activities.
Differences between immovable and movable properties
Aspect |
Movable property |
Immovable property |
Registration requirement |
No registration required |
Registration required under the Registration Act 1908 (mandatory for properties worth over Rs. 100) |
Taxation |
Purchases and ownership are subject to tax |
Stamp duty and registration fees are applicable (as per the Indian Stamp Act, 1899) |
Separation |
No difficulties in separating properties |
Legal procedures are required for dividing immovable properties |
Transfer of ownership |
Simple and straightforward |
Ownership transfer requires formal documents (e.g., sale deed, will, gift deed) |
Security |
Typically pledged as security |
Mortgages or liens are used for security purposes |
Rights associated with immovable property
Owning immovable property comes with several rights, each contributing to the value and utility of the asset:
- Right of possession: The owner has the exclusive right to occupy and use the property.
- Right of control: Owners can decide how the property is used, within the bounds of the law.
- Right of exclusion: Owners can prevent others from entering or using their property.
- Right of disposition: The property can be sold, leased, or transferred according to the owner's wishes.
- Right to enjoyment: Owners can use their property in any lawful manner that brings them pleasure or profit.
Other rights on immovable property
In addition to the fundamental ownership rights, several other rights can be associated with immovable properties:
- Easements: These are rights to cross or otherwise use someone else's land for a specified purpose.
- Leases: Property can be leased to others, providing the owner with rental income while granting the lessee temporary rights to use the property.
- Mortgages: Immovable property can be used as collateral for loans, such as a loan against property by Bajaj Finance, enabling owners to access funds without selling their assets.
- Licences: These are permissions granted by the property owner to another party to use the property for a specific purpose.
Gift of immovable property
According to the Income Tax Act of 1961, gifts of immovable property may be taxable. Let's look at the tax implications on immovable property as gifts.
Gift type |
Scenario |
Payable tax amount |
Unconsidered: Immovable property such as buildings, trees, and land. |
Rs. 50,000 or more in stamp duty. |
It equals the value of the property as far as stamp duty is concerned. |
In consideration of buildings, trees and land that fall under the category of immovable property. |
There is a difference of over Rs. 50,000 between the property's stamp duty value and its consideration. |
Subtract the consideration amount from the stamp duty value of the property. |
Conclusion
Understanding immovable property is fundamental for anyone involved in real estate or property investments. These properties offer stability, appreciation, and various rights that make them valuable assets. Leveraging such properties through financial products like a loan against property by Bajaj Finance can provide significant benefits. Immovable property remains a cornerstone of wealth-building and legal clarity in India.
