(A) you have two choices as to filing your US return-- (1) file now with the information you have and then comeback and amend your return in line with Indian IT settled return ( i.e. after the Indian taxes have been finalized / settled ) --- note that India uses basis indexing while US does not and so Indian taxes may be different than the TDS amount OR (2) file for an extension with the iRS before the 15th of April and once all the dust has settled with Indian taxes then file your return ( both Fed and State )
(B ) Because you have used the property for income ( rental ), hopefully you have been reporting the income from India on Schedule-E every year. There also should have been depreciation declared. This depreciation accumulated over the years would reduce the US basis of the property , thus increasing the gain and therefore taxation. Your State would also want a cut of this
(C) Your US basis of the property is Fair Market Value of the property on the day of death of the decedent or an alternate date within six months -- US does not index the basis -- it remains the same as at the start. To this you add all the cost(s) of improvements
(D) if you did not recognize the depreciation over the years , you can let TurboTax recompute it for --- you enter the original basis ( FMV on the day of death ) in US$ of the day; any associated land value ( not depreciable ) ; the date on which you made the property available for rent; that the property is foreign residential --- these will allow TurboTax to compute the allowable accumulated depreciation
If there is more you need on this please feel welcome to comment / ask ( either here or PM )
Namaste Ji
Do you have a question about the sale of real estate in India?
Yes. I am not sure where to report it in Turbotax. I have already paid 20% Tax at Source in India and would like to see if I need to report as Income here again and if so where. Thank you !
@sunil_kuchipudi , assuming that you are a US citizen/Resident ( Green Card )/ Resident for tax purposes, you are taxed on world income. Thus income from sale of assets in India are taxable to the USA. Please provide the following info :
(a) when did you acquire the property; (b) how did you acquire - buy, inheritance or what; (c) when did you acquire the property; (d) was the property being used for personal purposes or rented out for income; (e) did you make any improvements to the property during the period you held the property; (f) the 20% tax you paid in India is a withholding at source, right? Or have you filed the final return in India ?
Namaste ji
Yes. US Citizen/Permanent Resident. Property acquired through inheritance (digit and rented out. No improvements, Yes 20 % is TDS (taxed at source) and I have paperwork and will file taxes in India this March. Property sold last December 2019. Thank you !
(A) you have two choices as to filing your US return-- (1) file now with the information you have and then comeback and amend your return in line with Indian IT settled return ( i.e. after the Indian taxes have been finalized / settled ) --- note that India uses basis indexing while US does not and so Indian taxes may be different than the TDS amount OR (2) file for an extension with the iRS before the 15th of April and once all the dust has settled with Indian taxes then file your return ( both Fed and State )
(B ) Because you have used the property for income ( rental ), hopefully you have been reporting the income from India on Schedule-E every year. There also should have been depreciation declared. This depreciation accumulated over the years would reduce the US basis of the property , thus increasing the gain and therefore taxation. Your State would also want a cut of this
(C) Your US basis of the property is Fair Market Value of the property on the day of death of the decedent or an alternate date within six months -- US does not index the basis -- it remains the same as at the start. To this you add all the cost(s) of improvements
(D) if you did not recognize the depreciation over the years , you can let TurboTax recompute it for --- you enter the original basis ( FMV on the day of death ) in US$ of the day; any associated land value ( not depreciable ) ; the date on which you made the property available for rent; that the property is foreign residential --- these will allow TurboTax to compute the allowable accumulated depreciation
If there is more you need on this please feel welcome to comment / ask ( either here or PM )
Namaste Ji
I will probably pick one of the alternatives (either file the return and amend or request extension).
One last question, just so that I know....
where would I enter the real estate transaction in turbo tax ? Is it in Schedule D (Capital Gains and Loss) or should I enter in Rental Properties and Royalties (Schedule E).
When I enter via Schedule D - Turbo Tax warns me the following.
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How would you calculate the cost basis in dollars e.g should i be considering the dollar rate at the time of purchase? Where can find dollar rate for older years
@SUTUMA wrote:
How would you calculate the cost basis in dollars e.g should i be considering the dollar rate at the time of purchase? Where can find dollar rate for older years
Go to this IRS website for yearly average exchange rates - https://www.irs.gov/individuals/international-taxpayers/yearly-average-currency-exchange-rates
Turbo tax calculations are showing the sale of real estate at two locations - Sale of Home and Sale of business property - I had home in india which was rented and now i have sold it - where should i enter the details and taxes paid in India how do i enter the taxes paid in India
@SUTUMA first need a little clarification:
(a) how did you acquire the house in India? (b) when did you acquire it ; (c) did you use it as your main home and if so till when; (d) when did you convert this to rental/income property ( i.e. when did you first advertise for rent); (e) have you been using schedule-E to report the rental income/expenses/depreciation etc ever since ; (f) are you US citizen/Resident ( Green Card ) / Resident for tax purposes and lastly (f) are you married.
All these answers will help setup the situation as it exists. Generally you report the sale as of the current state of the property -- so if at the sale the property was rental then you report is as rental property sale and not as also a home sale. The sales are treated the same way i.e. a converted property ( home to rental ) still includes the effects of the depreciation to the basis of the property inc computing the gain. The treatment of the gain and the exclusion thereof are generally first the allowable "recovery/clawback" then the rest of the gain either as capital gain or excluded gain.
Please provide the answers so we can go forward with the rest
Namaste
pk