@ay66026 if you took UKPounds 400,000 , deposited in an account in India ( now it is INR 32,000,000 at INR80 per UKL ), then use INR30,000,000 to buy and furnish a house, then you let the INR 2,000,000 sit in the Indian bank for two years at which time it is now say INR 2,500,000 for arguments sake. You then transfer this INR2,500,000 to your US bank the following is what you have to recognize ( assuming that the UK bank amount had already been taxed by UK and you were a UK resident at the time and not US resident--->
you would have to recognize the interest earned as part of your world income ( USA resident ), converted to US$ at the published exchange rate when the interest was made available to you.
The use of the property a the time ( i.e. during the tax year for US purposes ) determines the taxability i.e. if it your home and not rented out -- it is treated as a second home and hence mortgage interest etc are deductible to you. If it is used temporarily used as rental property ( and for profit ) then the income must be recognized, expenses allowed and depreciation claimed on schedule-E.
Does this generally point you in the right direction or do you need more on this -- in which case you have provide more details on the transactions already completed and your near future plans, please
