large recurring transfers of to India from US and/or taking Indian mortgage

Question

I am a US citizen and have lived in America my entire life. My wife is an Indian citizen is in the US on a Greencard (K1/fiancee visa) for the last few years.

Before marriage, when she was in India, her parents and she bought real estate property under a joint name. It has come time for us to take over the payments. There is roughly $212,000 left to pay. The property is still being built so how much we need to give will depend on the speed of construction/development.

For now we have to send $10,000 (USD) and will probably need to send numerous more payments of this size over the next few years.

She has a job here and any money we transfer will be from her account to her parent's Indian bank account.

I have a few questions:

1. Are there any US or Indian tax implications of us sending this amount of money on a recurring basis? I have read/heard we can send it as a gift with no issues?
2. As my wife is still an Indian citizen can she take a home loan out in India and she transfers money to a bank account there to pay the loan every month.

Answer 1

Are there any US or Indian tax implications of us sending this amount of money on a recurring basis? I have read/heard we can send it as a gift with no issues?

If you are transferring money to Parents bank Account in India; from US taxation it would be under gift tax, $14K per person. So you and your wife can transfer to your MIL/FIL and her Parents around $14K * 4.

From India tax point of view, gift received from close relatives is tax free and there is no amount ceiling. i.e. there is no tax implication for her parents.

As my wife is still an Indian citizen can she take a home loan out in India and she transfers money to a bank account there to pay the loan every month.

You wife needs to open an NRE account in her own name [if not already done]. Funds can be transferred to this account. The Home loan EMI can be paid from this account. It is advisable to go via this route as whenever you sell the home and need to move the funds back to US, the amount of EMI paid from NRE account can easily be moved back to US. Otherwise there is a ceiling and paper work to move the funds.