Capital gain on swapping of house

This query is : Resolved

S.Vix (Querist)
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20 May 2015 MR.X AND MR.Y ARE BROTHERS MR.X OWNS HOUSE PROPERTY IN PLACE 1 AND MR.Y OWNS HOUSE PROPERTY AT PLACE 2 THE FAIR MARKET VALUE OF THE HOUSE PROPERTIES ARE DIFFERENT NOW MR.X AND MR.Y WANTS TO SWAP THEIR HOUSE PROPERTIES WITHOUT ANY MONEY CONSIDERATIONS I.E. MR.X WILL REGISTER THE HOUSE PROPERTY OWNED BY HIM TO MR.Y AND VICE VERSA WILL THIS TRANSFER TAXED UNDER THE HEAD OF CAPITAL GAIN KINDLY ADVICE

CS Advocate Abhishek Goyal

CS Advocate Abhishek Goyal (Expert)
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21 May 2015 As per section 2(47) of income tax act which contains definition of transfer, exchange is also a mode of transfer hence liable for capital gain tax. Capital gain tax will be chargeable in the hands of that person who gets property with higher fair market value.

CS Advocate Abhishek Goyal

CS Advocate Abhishek Goyal (Expert)
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21 May 2015 For this purpose sale consideration will be fair market value of the property which is received in exchange. For example if capital gains accrues to Mr X than sale consideration for him will be fair market value of the property which is gets in exchange from Mr Y.

S.Vix

S.Vix (Querist)
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21 May 2015 SIR, AS THE TRANSACTION WAS BETWEEN BROTHERS WITHOUT ANY CONSIDERATION CAN IT BE CONSIDERED AS GIFT AND AVOID TAX PLEASE ADVICE

CS Advocate Abhishek Goyal

CS Advocate Abhishek Goyal (Expert)
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22 May 2015 Mutual gifts must be avoided as far as possible. However a reasonable time gap may be kept between two gifts so as to avoid any suspicion of mutual transfer. But then both brothers will have to register the gift deed and accordingly incur registry expenses.

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