My brother has recently sold some land. He wants to buy my house so that he can minimize his capital gains tax payment. If I sell him my house, will he be eligible to claim exemption on the tax as intended?

Answered on November 08, 2017

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As your brother is selling land and is willing to acquire residential flat, he can claim the exemption under section 54F of the Income Tax Act which allows purchase of residential property against sale of any long term capital asset. If the cost of property purchased is higher than sale consideration of the land then entire capital gains will be exempt otherwise only proportionate gains will be exempt. Exemption under this section can be claimed by your brother only if he owns not more than one residential property other than one he intends to purchase. Further, if he intends to purchase a residential flat from you, then assuming the property is a long term capital asset (holding period more than 24 months), then capital gains will arise in your hands