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I am from India staying in US since Jun-2014 got Greencard in Jan-2018. I own property in India since 2009. I want to sell and bring money to US, How does US tax apply?
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I am from India staying in US since Jun-2014 got Greencard in Jan-2018. I own property in India since 2009. I want to sell and bring money to US, How does US tax apply?
@vinay-kotamreddy , sale of assets in a foreign country for a US citizen/Resident ( Green Card ) / Resident for tax purposes, is treated the same as if the property was in the USA. If the property was income property then there is allowable depreciation to be considered for tax consideration ( Capital gain treatment vs. ordinary gain ) You tell TurboTax that you have asset disposal to report and it will fill out the forms for you. Note that you will have to report the basis in US$ at the time of acquisition ( how did you acquire the property ? ), any improvements during the period of holding in US$ of the day and the sales proceeds ( Sales price less sales expenses etc. ) in US$ of the day. If the amount rests in any foreign bank then you also may come under requirements of FBAR ( Treasury form 114 ) and FATCA ( IRS form 8938 ).
The transfer of the funds is not a tax event .
Is there more help I can provide ?
Namaste ji
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I am from India staying in US since Jun-2014 got Greencard in Jan-2018. I own property in India since 2009. I want to sell and bring money to US, How does US tax apply?
I am planing to sell my own property in India which i bought sometime around 2006 and have rented all along. Now, we are planning to sell that, bring the money here to US$ and invest the same on my new home.
In related to this, how does Tax work in India & US? I am hearing that buyer will deduct 22% as TDS on the sale amount. I am okay with that, but not sure whether do i need to to pay anything more to India or US from tax purpose
Also, i see that we can claim the TDS if we invest the amount in real estate or bonds. if i invest the amount in US real estate, am i eligible to claim that?
Appreciate your response on this...
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I am from India staying in US since Jun-2014 got Greencard in Jan-2018. I own property in India since 2009. I want to sell and bring money to US, How does US tax apply?
@sugumarc , from your post, while not explicitly stated, I am assuming that (a) you and your family ( if you file jointly ) are US citizens/Resident ( Greencard ) / Resident for tax purposes; (b) your property in India was acquired by you / spouse by purchase and not by gift or inheritance, i.e. you have documentary evidence as to the price you paid in 2006 ( converted to US$ of the day ); (c) you have documentary evidence , & expenses thereof ,of all the improvements that you have made to the income property over the years; (d) that you have include/reported your rental income every year to the IRS and the State during this holding period .
If some or all of the above are not true, then please start a new question and I will come back and answer to the best of ability -- Namaste ji
With the above out of the way--- (1) you tell TurboTax ( I use the Home & business version, downloaded/CD) , in the business section that you have sold a rental / income property and TurboTax will do the needful i.e. fill out the forms 4797, schedule-D, Schedule-E etc. along with the 1040. You will need the following data points -- 1. Adjusted Basis = Acquisition Cost PLUS Cost of all improvements PLUS Suspended LOSSES, LESS Accumulated allowable depreciation ( note here that for the years through 2017 you need to have used a life of 39.5 years , like commercial property while any started after that date , that distinction for foreign property is not valid any more); 2. Sales Proceeds = Gross Sales amount LESS all sales related expenses including transfer tax etc. TurboTax would then compute your gain as the difference between Sales Proceeds LESS Adjusted Basis. Thereafter, it will compute the tax applicable --- note that part of the gain that is attributable to allowable depreciation ( i.e. gains up to accumulated depreciation ) is treated as Ordinary gain and taxed at your marginal rate , the rest / residual portion of the gain would be treated as Capital Gain.
The taxes paid ( not the flat amount collected at source ) is eligible for foreign tax credit-- form 1666.
India uses an indexed basis (i.e. the acquisition cost is adjusted for CPI / inflation ) while US does not. Thus profit in India may be much less than that computed per the US tax laws.
Any monies from India that rest in a Bank account that you Own or have control over , may come under FBAR ( Treasury form 114 ) and/or FATCA ( IRS form 8939 ). You may have to file one or both depending on the amount and situation -- there is no tax impact but not filing when required to, may result in onerous penalties.
Does this answer your query or do you need more help ?
Namaste ji
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