There are two immediate issues and two long term issues.
1. Form 3520 is required if the value of the gift is $100,000 more (in US$ using the conversion rate on the day of the gift). However, if your son is the recipient of the gift, then your son files form 3520 in his own name, even if he is a minor. If your child is unable to sign, you may sign for him, but you don't file the form 3520 in your own name. Also, form 3520 is filed separately from the tax return, even though it is due the same date. Use a separate envelope and mail it to the correct address in the instructions, which may not be the same as the mailing address for your tax return. Turbotax does not support form 3520, you will have to do it yourself.
Tax rules for children
https://www.irs.gov/publications/p929#en_US_2021_publink1000203765
Form 3520
https://www.irs.gov/forms-pubs/about-form-3520
2. There are no ongoing tax requirements to owning property, even if the property is overseas. You only report income, if the property generates income. However, it is very important that you document the cost basis of the property and the fair market value on the day ownership is transferred, both in US$.
Cost basis is the price your parents originally paid for the property, determined in US$ at the time of purchase. (You can use the daily conversion rate or the average annual rate for the year they purchased it if it was a while ago. The government publishes a list of exchange rates.) The cost basis can be increased by the cost of permanent improvements (like a new roof or an addition) and must be decreased by depreciation if the property is used in business or as a rental, again using the currency exchange rates in effect at the time of the improvements. Fair market value is what a buyer would pay. You may be able to get an estimate from a real estate professional, again using the current US$ conversion rate. (In the case of gifts, if the fair market value on the date of the exchange is less than the owner's original purchase price, the cost basis may be the lower value. This is described in the links below.)
The cost basis that a gift recipient uses for a gift is the cost basis of the giver. That means your son's cost basis will be the same as the cost basis of your parents. Whenever your son either places the property in service as a rental, or sells it, he must know the cost basis. His taxable capital gain will be the difference between the selling price and the cost basis. If he can't prove or doesn't know the cost basis, the entire sales proceeds may be treated as taxable income.
Cost basis is not adjusted for inflation under US tax law.
Whenever your son sells the property, he will likely owe tax to India that is calculated according to Indian tax laws (which do have an inflation adjustment, I believe) and he will owe tax to the US that is calculated according to US tax law. The US should give him a credit for taxes paid overseas that may partially or completely offset the foreign tax.
The best time to document the fair market value and cost basis is now, while events are fresh in mind.
And lastly, remember that the need to file form 3520 is based on the present fair market value, even if the cost basis is less.
Exchange rates
https://www.irs.gov/individuals/international-taxpayers/foreign-currency-and-currency-exchange-rates
Basis of property
https://www.irs.gov/taxtopics/tc703
https://www.irs.gov/faqs/capital-gains-losses-and-sale-of-home/property-basis-sale-of-home-etc/prope...
3. Under current tax law, if your son pays annual real estate taxes (property taxes), taxes paid on overseas property are not deductible on a US tax return. However, that law might change, so when your son starts having income and paying tax, if he is also paying property taxes, he should check to see the current rules on deducting taxes.
4. If the property is held as investment property (with the intention of someday selling for a profit or using it for business or a rental), he should keep track of his carrying costs. Things like property taxes, insurance, maintenance, and utilities needed to maintain the property in good condition. (A caretaker, if the property is empty.) Under current tax law, there are no tax benefits for paying carrying costs on investment property. However, those rules might change in 2026, and there could be tax benefits to keeping track of and claiming the carrying expenses. This only applies to property held as an investment. Property held for personal use is never eligible for any deductions for carrying costs. (If the parents live there, that is personal use. Or, if they move out or pass away and the home is used as a family vacation home or temporary home for friends and family that you don't charge rent to, that is personal use as well.)
