FBAR / Form 8938 - Determining maximum account value for installment payments to buy foreign property

[bhmaroon]

Hello, 

I would like to get guidance on how to determine maximum account value to report on FBAR and/or form 8938. Scenario as below: 

I made multiple installment payments to buy a property in India. These were money transfers (Western Union) from my bank accounts in US to NRE account in India. Amount transferred to NRE was eventually used to make installment payment to the builder. There were no trusts or foreign partnership involved, just direct payments to the builder. 

1) Looking at NRE transaction statement, I determined maximum account value at any time in the year is ~72k USD. I understand with this, I need to file FBAR. 

2) But since they were sustained installment payments (multiple times in a year), consolidation of all the installment payments take the total transfers from US to Indian account to ~160k USD, which is above reporting thresholds of 150k and triggers the need to file form 8938. 

I reviewed the text in IRS and FBAR portals and interpretation leans toward 1) although I understand there are grey areas with respect to "structuring the payments" to be under the reporting thresholds (definitely not intentional, since these were installment payments. Sometimes there are 2nd order logistical concerns with respect to money transfer limits per day, bank transfer limits per day etc.,) , which makes me think that I should consider 2) instead 

I would appreciate help and guidance here to understand whether I need to file form 8938 as well. Decision to file or not seem to change depending on how I interpret the maximum account value (1 v/s 2). 

Thank you! 

@bhmaroon 

[pk]

@bhmaroon , Namaste  ji

(a) ref --- > Comparison of Form 8938 and FBAR requirements | Internal Revenue Service

(b) as I understand the situation for 2025 ---

                  1. you own/operate an NRE bank account ( at xxxxx bank/institution) with a max value in the account of >> US$10,000. Highest value during 2025 was US$72,000.

                   2. during  year 2025 you also transferred amounts to a builder ( payments towards acquisition of real-estate totaling  US$160,000  (  including amounts directly transferred and those from the NRE account in #1 above ).

                  3.  The excess i.e. the direct transfer amounts were to building/promoter direct ban account or what ?

                  4. What was the residual amount in your NRFE account as of 12/31/2025 ? 

(b)  I am assuming that you are a US person ( citizen/GreenCard/Resident for Tax Purposes )

(c)  Assuming the above to be substantially correct:

                  1.  FBAR reporting is definitely required --- this is done at BRA-efiling  under  www.FinCen.gov , ONLY on-line filing is allowed, form 114 and file as individual.  Assuming that the NRE bank account is only in your name  or is jointly owned by you and your spouse ( you have to file under the correct category).  This is not a tax event.

                  2.  FATC A filing form 8938 is for specified financial asset. The threshold for filing are  as  delineated in the ref. above --- generally US$150,000  ( liquid, semiliquid, trust etc.) , excluding real-estate.  Because  ( and correct my assumptions please) your actual cash/semiliquid holdings  may not have crossed the threshold, you may not have to file the form 8938.  My question here would be  how the  builder/developer/promoter held the "payments made" -- is it in a pool or was it held segregated i.e. in an  "credit" account that belonged to you till the delivery of the property.  If it is this latter ( an account with your name  as beneficiary ) then you would need to file a form 8938 -- because it is like  trust account that will be closed  when delivery is complete.

Does this make sense ?

Is there more I can do for you ?

Namaste ji

[bhmaroon]

Namaste @pk ji, 

Thank you for the reference pointers and detailed responses.

For, 

b) 1. Correct, highest value at any given time in my NRE account was 72,000 USD. Although this was temporary and lasted 2-3 days until I made payment to builder from my NRE account. 

b) 2. To clarify, all the payments that I made to the builder went from my NRE account only. Just that before I made the first payment, my NRE account max (which is also maximum account value for 2025) was 72,000 USD. When I made subsequent payments from US Bank account to NRE account to Builder, the maximum account value in my NRE account was always less than 72000 USD.

Example as below: 

For first payment milestone, 

-- Initial NRE account balance = 2k USD

-- Transferred 70k USD from US to NRE account, 

-- New NRE account balance = 72k USD

-- Transferred 70k USD (1st installment) to builder's bank account from NRE account

-- Final NRE account balance = 2k USD 

2nd payment milestone (few weeks later)

-- Initial NRE account balance = ~2k USD

-- Transferred 30k USD from US to NRE account, 

-- New NRE account balance = ~32k USD

-- Transferred 30k USD (2nd installment) to builder's bank account from NRE account

-- Final NRE account balance = 2k USD 

3rd, 4th, 5th payment milestones of 20k USD transfers each time and in a similar manner as above. In the process, I transferred ~160k USD from my US account to NRE account and subsequently to the builder's account (5 different transfers / payments). 

b) 3. All payments to builder was only through my NRE account. When I mentioned direct payment to builder, I only meant, there was no other intermediate account like a trust, partnership etc., Just direct transfer from my NRE account to Builders Bank account. 

b. 4) Residual value of NRE account on 12/31/2025 was ~4k USD and I am US Resident Alien for Tax purpose. 

c. 1. Yes, understood. I will file FBAR but still I would like to understand what should be the maximum account value to be considered? Should it be 72k USD or should it be ~160k USD? 

c.2. Thanks, similar question as c.1 about the maximum account value to be considered? If it is 72k USD, then I understand Form 8938 is not needed. But if it is ~160k USD, then I need to file form 8938. Can you please advise which value to consider?

>> My question here would be  how the  builder/developer/promoter held the "payments made" -- is it in a pool or was it held segregated?

Consolidated amount of 160k USD that I made as payments are held in Builder's bank account, usually referred to as Collection account. This is not a trust nor is there a partnership involved nor I have my name as beneficiary. It is entirely builder owned bank account to which I make the payments. 

Thanks again for detailed explanations, it is mostly clear to me except for few follow up questions as above. 

[pk · Accepted solution]

@bhmaroon ,  Namaste ji

Now I understand what you have done -- used the NRE account as a bridge to transfer / make  progress payments to the builder/promoter for the property.

In such a case, it is my belief that you would meet the  FBAR  threshold requirement ( using the maximum value at any point of US$72K ). Please file the form 114 as described above in my earlier response.

I do not believe that you need to file form 8938   ( absent your having / owning any other Specified foreign financial Asset  -- liquid/semi-liquid/trusts etc. ) on the basis of the NRE account that you own.  Note that under the FATCA regs., the US treasury and the Indian Financial institutions share data anyways. 

If there is more help you need please feel welcome to add to this thread or PM me ( just NO PII -- Personally Identifiable Information) if you wish privacy  from the public eye.

Namaste ji

pk

[bhmaroon]

Thank you so much @pk , ji. Your inputs help to clarify my questions!