249. Purchasing property jointly

in India with parents

Q: Hello, I am a US Citizen and have recently applied for a PIO card. I would like to assist my parents in India to purchase a property. In my case, my parents are paying 60% of the new home value and I am planning to borrow money in USA from my local bank to pay for the remaining 40%. The new property purchased in India will be jointly owned by my parents and myself. Can I transfer the money I will receive from the home mortgage loan from my local bank to my parents account at a bank in India? Can I open a NRE bank account to conduct the real estate transactions after I receive my PIO card? Can I sell the property after 3 years and repatriate the money from the sale back to USA? Will my parents and I have to pay capital gain taxes after 3 years if the selling value is more than the purchase value? Will I have to pay capital gain/income tax in USA after I repatriate the money back to my bank account in USA? Are there any limitations to who I can sell the new property to in the future? I will greatly appreciate your response. Thank you in advance. Deepesh A. Regarding your questions: 1. Yes, you can transfer money from your local US bank to your parents bank in India. However, I think you should first send the money to a NRE account and pay your share of the property from this NRE account. This will help keep a record of your contribution in foreign currency, which will help in repatriation when property is sold. 2. You can open a NRE account even if you don't have PIO card. You can also purchase property without having a PIO card. 3. You can sell your property after 3 years and repatriate only the money you sent from abroad to purchase the property. Profit would have to be deposited in a NRO account first and then can be repatriated. All taxes need to be paid before any money can be repatriated. You will require a certificate from an accountant verifying this. 4. Remittance facility in respect of sale proceeds of immovable property is not available to citizens of Pakistan, Bangladesh , Sri Lanka, China, Afghanistan, Iran, Nepal and Bhutan. 5. Capital gains will have to be paid by both you and your parents as per share of property ownership. 6. Foreign capital gains for US residents are taxable. Technically even if you don't repatriate the gains they may be taxable in USA. Although the double tax avoidance treaty between India and USA may help either limit or even eliminate your tax liability in the United States. You can sell the property to anyone you wish except to a foreign citizen of non-Indian origin. In case you sell to a Nri, OCI or PIO holder all transactions such as payments must not be made outside India. While your idea of helping your parents purchase property is commendable, getting a US bank to give you a mortgage on a house purchase in India is not going to be easy.