Capital gains from property sale in india

[arvind-maral]

I am a US citizen and sold a property in India last year. Had the property for 10 years of which it was rental for 5 years but did not live there. The capital gains calculated in India considers an inflation index due to which the gains calculated are on lower side as compared to the US. Additionally, there was a scenario where i could buy or invest in capital gain bonds equivalent to the gains from property sale. As a result of this, i was exempt from paying capital gains tax and hence have not paid gains tax in India.

To give some figures, example of $40,000 sale whereas cost of purchase (including taxes/expenses) is $22000. The capital gains calculated in India after considering inflation index were $6500. Hence invested in the bonds for 3 years for $6.5K and not have to pay tax

Is there a consideration for the gain bonds while filing US taxes in reporting the home sale / capital gains calculation section. Also, can the inflation indexed value be considered while entering cost of purchase in US taxes?

Is so, how do we enter this?

Thanks,

[sajeevmenon]

On  the above question, If I have significant carry forward capital loss, can I adjust the above Capital Gain from India with this Capital Loss ?

[view2 · Accepted solution]

 The tax saving opportunities available in India cannot be extended to the US. That means, if you have reinvested the capital gains in India and saved tax, you will still have to pay tax on those capital gains in the US.

To calculate the gain, each transaction will need to be converted to USD on the transaction date, rather than the sale date. All income must be reported in US dollars on USt taxes.

[arvind-maral]

Thanks

[view2]

Your welcome.