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Mark D
Mark D, Enrolled Agent
Category: Tax
Satisfied Customers: 989
Experience:  MBA, EA, Specializing in Business and Individual Tax Returns and Issues
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I am a citizen USA by birth and a resident since 2007 prior

Customer Question

I am a citizen USA by birth and a resident since 2007 prior to which I was living in India.
I own a business in Los angeles California and am filing my tax returns since 2007.In addition I also own a home in Los angeles California.I own a property in India which I intend to sell for approximately 100000$.I need to know as to how can I bring this money into the US without having to pay any hefty taxes in both India and the USA.Is there any restriction on part of governments in both countries in this regard?
Submitted: 3 years ago.
Category: Tax
Expert:  Mark D replied 3 years ago.

Mark D :

Hello,

Mark D :

The property would be subject to capital gains in the US, however you would be able to claim a foreign tax credit for any Indian taxes paid on the same income.

Mark D :

If you held the proeprty for more than one year, your max rate Federal would be 15% on the profit.

Mark D :

also of note, as a citizen, you should be wary you may need to file income taxes in 2006 and before, if you met certain income limits.

Customer:

How would the capital gains be determined I mean it is based on what?15% of what?

Mark D :

Also, any signatory or ownership in foreign bank accounts and investment (not the home) should be reported each year on Form TDF 90-22.1

Mark D :

The 15% would be on the profit, so the sales price less selling costs and you adjusted basis

Mark D :

if a personal residence, would be reported on Schedule D, if a rental property, would be reported on FOrm 4797

Mark D :

Does this answer your question?

Customer:

How would the profit be determined?

Mark D :

how much did you buy it for?

Customer:

US$ 90000

Mark D :

$10K would be your profit, less any selling expenses

Customer:

Also the reporting of foreign bank accounts is with regard to accounts outside the US

Mark D :

yes

Mark D :

purely informational, but very important

Mark D :

Does this answer your question?

Customer:

Also since I havent reported this property or the bank accounts in the past how do I do it now????

Mark D :

The property is not reportable, unless it was a rental

Mark D :

You should see a local tax professional to assist you with the proper reporting for past years

Mark D :

Does this answer your question?

Customer:

No it was not rental but personal

Mark D :

so no reporting requirement

Customer:

also what about bank accounts?

Mark D :

Yes, should be disclosed on a Form TDF 90-22.1 for each year

Customer:

what about past years

Mark D :

each year, yes

Customer:

since i havent done it for previous years how do i do it now would there be any penalty if i report now

Mark D :

there is a current safe harbor. I would strongly suggest seeking the advice of a local tax professional to go over your specific private information

Customer:

Ok thanks

Mark D, Enrolled Agent
Category: Tax
Satisfied Customers: 989
Experience: MBA, EA, Specializing in Business and Individual Tax Returns and Issues
Mark D and 2 other Tax Specialists are ready to help you
Customer: replied 2 years ago.
Hi Again,
I have sold my property in India and paid 20% capital gains on the profit amount.If i bring the proceeds here would I have to pay the capital gain tax in the US as well?or is there an excemption.

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