I have a piece of land in India that I purchased about 20 years ago. I entered into a development agreement with a real estate developer in February 2014 for construction of apartments.

The agreement was to give me 4 apartments in lieu of the land and keep the remaining 8 for him.

The 4 apartments will be handed over to me soon in August 2016.

When will the tax liability arise for payment of capital gains tax in USA? Would it be when I get the apartments from the developer or when I sell them?

  • Congratulations. BTW if at some point in your life you're planning to move to another country, perhaps to maximize your retirement funds, this would be the time to do it! – Fattie Jun 2 '16 at 15:25

I suggest talking to a tax professional. This is not a trivial situation, and the day of recognition should be professionally determined. It is, at the latest, when you take possession of the apartments, and as early as the day of signing the contract. You'll need a professional to go though this deal and determine what is the date, and what is the value of the transaction.

  • And s/he'll answer whether it's a 1035 exchange. Tough to tell, but it may qualify. – JTP - Apologise to Monica Jun 2 '16 at 9:42
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    @JoeTaxpayer exchanging land for improvements? Don't think so. Assuming you meant 1031 exchange :-) – littleadv Jun 2 '16 at 9:53
  • uh, yup! Thx. That was it – JTP - Apologise to Monica Jun 2 '16 at 11:33
  • @littleadv - as a curiosity would it not really be possible, generally, to put it off until (years in the future) when the apartments are sold? – Fattie Jun 2 '16 at 15:26
  • @JoeBlow Sec. 1031 allows for in kind conversion, but I don't think land and condos are in kind. – littleadv Jun 2 '16 at 18:21

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