My mother in law wishes to sell her apartment in India and want to distribute the amount equally among her sons. She is a US citizen. All the sons are in US. The property in India was bought when she was an Indian Citizen. She does not pay any taxes in India. Question- Will she have to pay tax in India on sale of the apartment. Can she gift the amounts to her sons. Will the sons have to pay any taxes on the gifts.
Kuberankamala
RE gift tax
RE gift tax
Kuberankamala;407514My mother in law wishes to sell her apartment in India and want to distribute the amount equally among her sons. She is a US citizen. All the sons are in US. The property in India was bought when she was an Indian Citizen. She does not pay any taxes in India. Question- Will she have to pay tax in India on sale of the apartment. Can she gift the amounts to her sons. Will the sons have to pay any taxes on the gifts.
Kuberankamala
1) Yes, she will have to pay taxes in both India and the US on sale. She can take a credit for Indian taxes on US taxes.
2) There is no gift tax in India for gifts to children. There is a lifetime exclusion of $1M per person in the US on gifts, so this would count against that (for the donor).
She would be much better off just gifting the property to her sons in appropriate shares. Then there is no need to pay tax on apartment gains in either India or the US. There would be no gift tax in India. There would be a gift tax in the US only if above the lifetime exclusion.