389. Bring funds to USA from

India without paying Capital

Gains . . .

Question Dear Mr. Chand, Both me and my brother have bought your NRI guide, but the pages 138 and above to do not address the following question we have. We have inherited property in New Delhi and would like to bring the funds to USA legally WITHOUT paying Capital Gains Tax. We know that we can Roll over the funds into another property in India and there is no Capital Gains Tax. What about rolling the funds over into buying a primary residence property in USA and legally avoiding paying Capital Gains Tax in India? Regards Meera Answer: I believe US does not have an inheritance tax and hence you will not owe any inheritance tax in US. If you are receiving the inheritance from a foreign estate in excess of $100,000, then you must file Form 3520 with the IRS. This is an information return that is filed with the United States tax department and no payment is due. You can view this form by clicking HERE. The sale of such inherited property is usually considered the sale of a capital asset and may be subject to capital gains. The value at the time of death of the person whose property was inherited in such cases, is normally used as its fair market value. Gains above this value may be considered to be a capital gain in the US. Of course if the property is sold immediately, or within a reasonable time and no appreciation in value takes place after inheritance, then there may be no capital gains. I suggest you seek the advice of a professional. As for your statement, 'We know that we can Roll over the funds into another property in India and there is no Capital Gains Tax.' in my opinion, while there is no capital gains tax in India by using such exemptions, such exemption would not apply in the United States and taxes would have to be paid. In India, there is no capital gains on inherited property, that is until the person who inherited the property sells it. Once inherited property is sold, Indian capital gains taxes become payable. While in the US the fair market value is considered to be the value on the date of inheritance, this is not the same in India. The cost and the date of acquisition to calculate capital gains on this type of property, are that of the previous owner. By way of explanation, if a person inherits a home from his father, then when he sells the property, the capital gains are calculated using the price that his father had paid for the property. Regarding your question about purchasing a primary residence in the USA and avoiding taxes, In my opinion, you cannot purchase a property in the United States to save capital gains taxes in India. I encourage all readers to speak to professional tax accountants as each case is different. The intent of this website is not to provide tax advice to anyone. Readers are urged to contact the appropriate professional for all taxation matters. As for how to transfer money received from the sale proceeds of property in India to USA, please see page 173 of THE NRI GUIDE, under the title 'Step by step guide - transfer money abroad'.