Gift a house

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

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.

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.

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.