All Posts

@user17545861291 , Namaste ji Thank you for the answers to my questions. From your answers what I get : 1. You have held that condo property while a US person ( entire holding period ). 2. While you have chosen to use the  12.5% with no indexing, I would still suggest that you should investigate whether this is best path.  I say this because I have had at least one person here on this board ,  whom  found out that the indexing method was more tax advantaged (  his CPA  had originally computed tax based on the simpler 12.5% tax rule). 3. Per US-India tax treaty , article 25 ( Relief from Double Taxation ), US will recognize the taxes paid to India  dollar for dollar.  You have to file a form 1116  ( Foreign Tax Credit ) recognizing the  quantum of Foreign Source Income and the taxes paid to India thereon.  The applicable Tax treaty sentence is :   "1. In accordance with the provisions and subject to the limitations of the law of the United States (as it may be amended from time to time without changing the general principle hereof), the United States shall allow to a resident or citizen of the United States as a credit against the United States tax on income (a) the income tax paid to India by or on behalf of such citizen or resident;   "   4. Note that form 1116  will recognize the total foreign taxes paid but the allowable amount for the tax year is the lesser of taxes levied by US  and that paid to India.  Thus if  there is loss ( from alienation of the asset ) per US Tax Laws, then there will be NO allowable Foreign Tax Credit. The unallowed Foreign Tax Credit can be carried back one year or forward  for use in future years.  TurboTax will do the needful computations and the  carry forward or back , depending on your choice. 5. Generally for double taxation purposes, the foreign source income is usually the "income" that is being taxed by both countries.  In your case, this may become an issue because under Indian law you are showing a positive  foreign source income while under US laws you are showing a negative income.  And form 1116 does not allow a negative income. Thus IMHO you may not have a Foreign Source Taxable income.   Since I do not know the details of the situation  ( with actual data ), perhaps  you should consider  consulting with a tax professional , experienced in international taxation, esp. foreign tax credit.   Is there more I can do for you ? If you need more on this , you can post here or consider PM me   ( just no PII -- Personally Identifiable Information )   Namaste ji   pk