@laks thank you very much for all the information you provided. The pertinent items are
1. you are a US person and have been so during this whole episode.
2. You bought the property in 2006 ( closed / beneficial occupancy )
3. From 2006 through 2014 you used the prop. for personal use.
4. 2015 through 2024 you used the prop. as income property, recognized for US purposes on Schedule-E
5. You did not use any allowable depreciation. Note that for US purposes , it is not material whether you actually used the depreciation. The fact that it was allowable means that you have accumulated
depreciation for purposes of gain/loss computation.
6 You can go back for all those years and correct the returns to include the depreciation and hopefully you can create suspended losses ( again this depends on exact facts and circumstances ), but obviously if you were in a refund position ( already or because of the depreciation ) then only the last two years would get you any monies back.
So for US purposes and only for 2024, you tell TurboTax that the property on Schedule-E has been disposed off. This should trigger the interview for form 4797 ( sale of income asset ). Note that
(a) your basis = Acquistion cost + cost of any improvements over the years
(b) your adjusted basis = Basis LESS accumulated allowable depreciation ( whether taken or not )
(c) Gain/Loss = Sales Proceeds - adjusted basis.
(d) Sales Proceeds = Sales Price LESS sales prep costs + all sales related costs ( transfer tax, commission, suspended losses etc. etc. )
(f) Taxation of the gain --- all gains up to and including accumulated depreciation is treated as Ordinary gain & Taxed at your marginal rate; the rest of the gain is treated as Capital gain.
Another item to note is that if India has taxed you on the gain on the sale of this property ( the final settled amount , not the TDS amount ), this may be eligible for foreign tax credit. The allowable credit for the year would be lesser of actually paid or the amount US has taxed on the same gain. Here you have to be careful that you do include the correct foreign source amount and the correct foreign tax , using form 1116.
Does this help ? Is there more I can do for you ?
Namaste ji
pk
