Transfer of property proceeds from india to USA

Question

I am a U.S. citizen currently in Hyderabad for the past 3 or 4 years. I am not working and have no income in India but have Social Security monthly pension in U.S. (below taxable limit in U.S.) and deposited in my account in USA. When I was working in India – after getting U.S. citizenship – I secured my own PAN Card and Aadhar Card too.

My wife, who is an Indian Citizen, has an apartment owned by her. She is transferring her property to me by GIFT Deed.

We both would like to go back to U.S. and settle down there with my savings, and I intend to apply and secure a Green Card for my wife so that we both can live in U.S.

My question is: If I dispose of the property in Hyderabad – worth about Rs 80 Lacs (approx 130,000 USD) how can we take these proceeds to U.S. legally without any problems?

Alternatively, instead of transferring property to me, can my wife sell the property and can she take the money in U.S. Dollars to U.S. legally?

What are the best options I have?

Answer 1

As a US citizen, you must pay taxes on your worldwide income. That includes property you sell in India. Your wife, not being a US citizen or green card holder - doesn't need to pay taxes in the US (unless you both chose to treat her as a US tax resident).

Thus, it would make more sense for your wife to sell the property herself (before getting her green card) than to gift it to you and you then sell. Since gifted property keeps the donor's basis - you'll end up paying taxes on all the gains on your property that were accumulated while it was owned by your wife. Why would you do that?

Answer 2

Under the Liberalised Remittance Scheme and Small Value Remittances, an Individual Resident of India can transfer funds outside to India. Some of it also depends on when you actually sell the property, what would be the status of your wife, Would she be Non-Resident Indian for tax purposes etc. Please consult a CA who would advise the applicable scheme.