TAXES on SALE of Overseas Rental Property in India

[dkthecool]

I sold my property in India and paid taxes on it India. How does turbo tax allow me to claim those tax deductions ? Do i get taxed separately on the tax gains in US in spite of me paying taxes already in India ? If yes, how does the tax calculation works because in India there is an indexation on the property over the years which increases the cost basis of the property ?

[Mike9241]

for US it's sales price  less selling expenses plus lyour cost (tax basis without indexing for inflation) reported on schedule D/formm 8949

you have the option of deducting the taxes paid on schedule A - total limit on all deductible taxes is $10,000 and your itemized deductions must exceed the standard deduction for this to be of benefit.

or

take a credit against your federal taxes by completing form 1116 passive income category

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1. Open (continue) your return in TurboTax
2. Enter all your foreign income in Wages & Income if you haven't already
3. Select Search, enter foreign tax credit and select Jump to foreign tax credit
   • Or go to Deductions & Credits, and select Start next to Foreign Tax Credit under Estimates and Other Taxes Paid
4. When you reach the screen Do You Want the Deduction or the Credit? select the option you prefer for your situation
5. If you select Take a Credit: 
   • Select Continue on the next screen, then select No to fill out Form 1116
   • When you reach the screen Country Summary, select Add a Country
   • Answer the questions about your foreign income, taxes, and expenses on the following screens
   • When finished, you'll be taken back to the Country Summary screen. If you have income from other countries to enter, select Add a Country. Otherwise, select Done
   • Answer the questions on the following screens until you reach your Foreign Tax Credit Summary. If you’re finished with this section, select Done
6. If you select Itemized Deduction: 
   • Enter your foreign taxes paid on the next screen. These should show up in the Deductions & Credits section of your tax return, under Other Deductible Expenses

In most cases, taking the credit works out better than the deduction.