Retaining property in the US

msmmsi · Post by **msmmsi** » Sun Feb 25, 2007 7:01 am

Friends,
We are R2Iing in 2009. We own a house currently. We were thinking of moving into a condo a year before we left. After we R2I, we can rent the condo out.
Has anyone tried that? Does it make sense to maintain a property in the US?

Sabudana · Post by **Sabudana** » Mon Feb 26, 2007 9:09 am

Keeping property in the US will depend on the following:

1. How is the real estate market in your area ? If it is steadily increasing, it may be a good investment. If not (like Texas and other areas), then you will be better off selling the property.

2. Is there a good market for rental ? I know some areas in Michigan where even renting out is a problem since many folks have lost jobs there. Calculate how much rent you will be able to charge, can you renew/replace leases without breaks.

3. Add maintenance cost to all this. If you hire a mgmt co to manage your property, they will charge a percentage of the rent.

4. If property prices are rising, then even after all these costs, if you will break even, it will be OK. But if prices are not rising, you will just have the headache of maintaining a property.

5. Would you need cash for buying property in India ? If yes, then you may have to sell your US property, assuming you have enough equity.

I recently moved back from Texas, but sold my house since prices are steady for the past 6 years.

msmmsi · Post by **msmmsi** » Mon Feb 26, 2007 12:29 pm

Thanks for your help, Sabudana.

Since you mentioned that you have sold your house and moved back to India recently, can you please share with me,

I read somewhere that if you take more than $50K out of the country (in a calendar year) then you have to pay high capital gain tax.

Did you face this situation? If so, Were you able to avoid the capital gain taxes?

Sabudana · Post by **Sabudana** » Mon Feb 26, 2007 4:16 pm

If you make $50K as profit on selling your house within 2 years of purchase, Real Estate taxes will apply in the US. If after 2 years, then no taxes apply in the US.

Now if you transfer that money to India, I do not think you will be taxes, since you have already declared that income on your US tax return.

If you are talking about $50K other than real estate gain, then US tax laws will apply in the US. You will have to specify in India that you paid taxes on them in the US so that you will not be taxed twice. I am learning all these myself too. Look at other tax discussions on this forum. Those help a lot.

DosaiLvr · Post by **DosaiLvr** » Mon Feb 26, 2007 10:13 pm

Sabudana;9169Now if you transfer that money to India, I do not think you will be taxes, since you have already declared that income on your US tax return.
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I think this depends on your resident status, e.g an NRI w/ ROR status may not have LTCG liabilities in the US, but would be liable in India.

welcome10001 · Post by **welcome10001** » Tue Feb 27, 2007 9:30 am

Is there a thread already that discusses the tax implications for USC in US if selling a house and R2I same year?

Any feedback appreciated.

AndhraBabu · Post by **AndhraBabu** » Wed Feb 28, 2007 10:21 am

If you lived in the house for atleast 2 yrs (not necessarily continuous ) in the last 5 yrs of ownership, there is no Capital Gains Tax for profits upto $500,000 for couple.

This same for USC/GC/H1.

welcome10001 · Post by **welcome10001** » Wed Feb 28, 2007 12:21 pm

Thanks AndhraBabu.

What about the tax implications while filing indian tax return for the same year?(assuming I R2I this year and live 181 days in india )

shangrila28 · Post by **shangrila28** » Thu Mar 01, 2007 4:46 am

Doesn't this apply only to residents?
What if you sell early in the year and move out of the country (becoming non-resident for the tax year).