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I'm an H1B visa holder (a non-immigrant work visa) in the US. I've acquired some property in India a couple of years ago for around 30k$. It has nicely doubled in value since and it's worth around 60k now. I'm looking to sell that property to use as a downpayment towards the purchase of a house in the US.

How would I go about doing this? Are there any tax laws I should be worried about?

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    You need to declare the capital gains, and pay taxes on that sum at capital gains rate, on your US tax return. If you are taxed in India on the capital gains, then you can take a credit for this payment on your US tax return and thus reduce the amount you owe the IRS. If you invest the capital gains into various three-year bond schemes in India that create a waiver of the capital gains tax, then you don't get the reduction on US income tax. The interest you earn on these bonds is taxable income in India (as well as the US) and again, you get to take a credit on US return for tax paid to India. May 5, 2015 at 19:37

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How would I go about doing this?

Assuming you had purchased the house by funding from your NRE account, you can easily move back the 30K into NRE Account and out of India from NRI Account.
The 30K profit would be taxed in India as per capital gains and can only be moved into NRO account. A CA would need to certify that appropriate taxes have been withheld before the bank will release the funds for repatriation out of India. There is also a limit [large 1 million USD] on how much funds can be moved out of India. Consult a CA who would help you with the formalities.

If you have not funded the purchase from NRE account, the entire proceeds should be into NRO account and then move funds from there.

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  • I believe that the 30K profit (if not the entire proceeds of the sale) would have to be put in an NRO account (even if the purchase price was paid from an NRE account), and a CA would need to certify that appropriate taxes have been withheld before the bank will release the funds for repatriation to the US; I don't know if the purchase price portion can be transferred to the NRE account and thus still be kept in India. May 6, 2015 at 12:49
  • @DilipSarwate Yes.
    – Dheer
    May 7, 2015 at 1:48
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How would I go about doing this? Are there any tax laws I should be worried about?

Just report it as a regular sale of asset on your form 8949 (or form 4797 if used for trade/business/rental). It will flow to your Schedule D for capital gains tax.

Use form 1116 to calculate the foreign tax credit for the taxes on the gains you'd pay in India (if any).

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If you are using the money to invest in a property (even abroad) then you can claim tax exemption. while some people will tell you that the reinvestment should be in India only, it have been ruled that the property can be purchased abroad too..

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