Sold a property in India and reinvested gains in another property in India

[ss88]

Hello,

I sold a property in India in second half of 2024. This was not given out to rent at any point in time. The gains from the sale were reinvested in another property in first quarter of 2025 in India. For the 2024-25 financial year (1st April to 31st March) in India, there will be no tax liability in India tax returns.

Would there be any tax liable to be paid in US ? 

Kindly let me know. Thanks in advance.

@DaveF1006 @MaryK4 @AmyC : Tagging few experts I found on other posts

[MarilynG1]

That depends.  If this was never a rental property, but not your main home any time during the last five years, you could report it as the Sale of a Second Home.  Any taxable gains would be based on the difference between your Cost Basis and the Sale Proceeds.

If it was your main home any time in the last five years, you may qualify for the Home Sale Exclusion and not need to report the sale in your tax return.  The fact that you re-invested the proceeds into another property no longer is applicable in US taxes.

@ss88 

[ss88]

Thank you the response @MarilynG1 

This home was never a main home. But in the time we owned, we stayed there for about 6 months in 2022 and my parents were staying there occasionally during other times. Would it qualify for any partial exclusion ?

[MarilynG1]

It depends.  During the six months you lived in the home, did you have another 'main home'?  If so, your stay would not qualify you for an exclusion.  It would be considered that you took an extended vacation at your second home.  Your parents stays there would not count, only yours as the taxpayer/owner, as a main home during that time. 

If this was your 'main home' for the six month stay, to see if you qualify for any exclusion of capital gain on the sale, go to Deductions & Credits > Less Common Income > Sale of Home, and step through the interview questions.

@ss88