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Gift a house

08 December 2013

I have purchased 2 houses. The first is purchased via full down payment with no loan The second house via loan and I claim full deduction on interest Now I plan to gift the first house to my brother. My question 1) is there any tax implications in gift of house ? 2) after the gift of house will my second home be now considered as first home and I will be able to deduct only 1.5 lakhs as interest

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12 Replies

GAUTAM SHARMA (Audit Assistant) (353 Points)
Replied 08 December 2013

No Tax Implication.However u'll not be able to cliam deduction of 150000 in respect of house.

CA Shweta Purswani (Practicing Chartered Accountant ) (417 Points)
Replied 08 December 2013

In my view. You can claim deduction of 150000 of int

CA Deepesh Ruhela (Keen to Learn) (3271 Points)
Replied 09 December 2013

No tax implication on transfer of First house as gift.and you can claim deduction of Rs.150000 as intt. since loan is taken on second house.

Mihir (Wealth Manager) (5293 Points)
Replied 09 December 2013

You need to prepare a gift deed duly stamped and registered, on the basis of stamp value of the house. This gift shall be tax-free.

Krishna Rungta (Ceo) (49 Points)
Replied 09 December 2013

The interest component on my second house comes to 3 lakhs. Post the gifting of first house how much interest can I deduct on the second house

CA Shweta Purswani (Practicing Chartered Accountant ) (417 Points)
Replied 09 December 2013

150000 only as that house will now b considered As self occupied and the maximum available will be 150000 only

Ashok (Industry) (416 Points)
Replied 09 December 2013

A. Taxability of your brother:

This is covered by section 56(2)(vii)(b) -

any immovable property,—

(i) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property;

(ii) for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration:

However transaction between relatives is exempt. Relative includes brother or sister of the indiviudal.

So no worries on this count.

B. On your taxability

You may enquire with the sub-registrar's office regarding gift-deed for immovable property and the stamp duty thereon. Depending on the state in which you'r property is located the stamp value can vary (be prepared for anywhere between 2% and 7.5%) of the guideline value of the property. If it's a flat, you may pay stamp duty on the UDS (undivided share) only, but this again depends on the State you'r in.

As far interest deduction goes Sec 24(b) allows you maximum deduction of Rs.1.5 Lacs per year for self-occupied property. If you'r a co-owner of the property (say, along with your spouse) then each one of you is eligible for Rs. 1.5 Lac.

If this property is let out (because you live ouside the city where this house is located) then you can deduct the actual interest payable, provided you offer the rental value to income. But since you have not mentioned this fact it's difficult for me to comment.

sai nithu (student) (26 Points)
Replied 09 December 2013

section 24(b ): self occupied house interest allowed 150000/ 30000 (some conditions are satisfied )

garima (delhi) (24 Points)
Replied 09 December 2013

I agree with sai . Deduction allwable rs 150000. If we want deduction 24 b (max.150000) possetion compalsory on that house..

Amit khandelwal (students) (26 Points)
Replied 10 December 2013

Trf of house to relative is tax free provided

Amit khandelwal (students) (26 Points)
Replied 10 December 2013

Trf of house property is tax free provided proper legal document has made (gift deed ) and transaction is not revocable . On the other hand deduction of interest is depend on the property werher it is LOP OR SOP and decide accordingly .