Sale of NRI inherited Property and Repatriation of money
Do you have inherited property in India?
Do you want to sell and bring money here?
It is not much difficult to repatriate the sale proceeds from India but little bit advance planning will save you time and money.
The sale amount put into your NRO account can be repatriated up to $1 million per year subject to certain formalities.
All the banks in India dealing in foreign exchange can transfer money to your account in USA.
However, they need a tax clearance certificate in form 15CB and 15 CA from a Practicing Chartered Accountant there.
You also need to get PAN Card from Indian Income Tax. Please apply online if you do not have one yet.
As per Indian Tax Laws, you will be liable for long term capital gains tax of 20 per cent depending on the property.
These gains are calculated as the difference between sale value and indexed cost of purchase.
Please note that amounts paid outside the deed amount cannot be included as purchase cost.
You can add the cost of improvements.
As an NRI, you will be subject to a Tax Deducted at Source of 20 per cent on the capital gains and the buyer has to deduct and remit to Income Tax department 20% of the purchase price as Tax Deducted at Source.
Read this post if you want to know how to buy a property in India without you having to go to India.
Form 15 CA and Form 15CB
Whenever money is being remitted by an NRI, Form 15CA has to be submitted online at the income tax department’s web site.
Usually, a certificate from a chartered accountant provided in Form 15CB is also required before uploading Form 15CA online.
In Form 15CB, a chartered accountant certifies details of the payment, TDS rate and TDS deduction applicable as per Section 195 of the IT Act, whether DTAA (Double Tax Avoidance Agreement) is applicable, and other details of the remittance.
Banks will not remit the money until this certificate is provided.
You also need the service of the CA further to file your tax return there and get refund after deducting the capital gain tax applicable.
Again as aN US Resident, you need to include the capital gains in US tax return and pay capital gains tax on the profit.
Any tax you paid in India can be deducted subject to certain limitations.
I strongly suggest you to include a form 3520 return with your current tax return if not submitted before showing the value of the inherited property so you can establish a basis to the inherited property.
Hope the above help,
Please let me know your specific questions or concerns so I can guide you further.
Many of my clients successfully repatriated money from India.
Certified Public Accountant and Consultant
1016 Triple Crown Dr
Fort Worth,TX 76179