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I am on H1b visa in USA and thinking about buying property in India.

If I buy any property in india,do I need to report my property in USA income tax return, FBAR or anywhere else? Do i need to pay any tax in USA or India? I am living in a rented apartment here in USA. Please help me understand both cases where the property that I buy in India might be a residential home, land, commercial property

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You do not need to report property, but you need to report financial assets. Your bank accounts are reported on FBAR and form 8938, your partnership is reported on form 8865 (you mentioned planning to buy with your father - that is a partnership). Additional reporting may be required depending on the kinds of assets, formations or income you'll be having. If you have income derived from that property - it will be taxed in the US, unless a treaty allows excluding it (note that as a US tax resident, most of the Indo-US tax treaty doesn't apply to you).

  • Though it's only a partnership if they are running it as a trade or business to split the profits. If they are buying something together to consume together, it's not normally considered a US partnership - unless there's some "foreign assets" rule I'm not familiar with. – NL7 Apr 14 '14 at 19:19
  • @NL7 when they sell they'll have to report the income, will they not? – littleadv Apr 14 '14 at 22:40
  • Sure, definitely income. I'm not certain you're wrong, I'm just harking back to the ways to fall backwards into a partnership with poor planning. My recollection (this is an older, caselaw-driven part of tax law) is that it must be two or more people in business for profit. If they're holding it for resale then that's probably a profit motive. But if they're not starting a business or pursuing profit, then it's probably not an accidental partnership. They could of course elect to be one. I don't know that it's wrong so much as unnecessary. But there may be a foreign income twist. – NL7 Apr 15 '14 at 14:45
  • @NL7 but you only file partnership return when there's something to report, doesn't matter if it is domestic or foreign. In any case, the OP mentioned his father explicitly in the context of resale, in the other thread. – littleadv Apr 15 '14 at 15:22
  • Ah, I didn't see the other thread. Owning the property jointly doesn't have to create a partnership. That'd just be income to both of them as owners. If they're starting something like a trade or business, then they may be required to be a partnership. The reporting requirement is §6038 and the definition is at §7701(a)(2). It starts to get philosophical whether or not it's a business venture. It'd probably take more facts to know. But one-time income doesn't necessarily make it a business venture. – NL7 Apr 15 '14 at 15:53
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littleadv has covered US taxes.

Buying a property in India there is no tax liability created.

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