US citizen - reporting US rental income in India tax return

anitajojo · Post by **anitajojo** » Mon Jul 23, 2018 10:43 am

Dear folks,
i am an US citizen working in india for last 8 years. I have rented out my house in US. i make infrequent trips to US, and getting paid there. The income i make while there gets reported in the form16 here in india. So i have been filing india taxes based on the total income getting reported in form16, including the money paid in US.
I was under the impression that US citizens doesn't have to report the income ( rental in my case, which is again comes to mostly zero profit due to the depreciation i claim in US) in india tax returns. So i have been usint ITR1 all the time.

This year, my friend advised me this may not to right, i will have to file in ITR2, declaring all the foreign assets and even rental income ( dont know about the depreciation part, whether i can claim)..

so my question, is there anyone who is in the similar situation? if i have been doing it wrongly, how can i correct?

Thanks much,
Anita.

g_senthil_mm · Post by **g_senthil_mm** » Mon Jul 23, 2018 2:10 pm

Once you become a "Resident", you need to declare the foreign assets and pay tax on rental income in Schedule -FA.

My wife become a resident this year and she had to declare all the bank accounts held overseas with peak balances, interest, mutual fund accounts, pension accounts and had to pay tax on bank interest and dividends received.

As far as correction part is concerned, I guess efiling website allows you to amend tax returns up to certain no of years.. A good CA would be able to advise you on that.

anitajojo · Post by **anitajojo** » Tue Jul 24, 2018 8:08 am

Thanks Senthil.
Can I ask one follow up question? you said the dividend and interest were taxed here. But they are taxed in US as well, correct? I am filing my US tax returns, reporting and filing taxes for the rental income there. That was one reason I assumed I don't have to report it here..

Thanks much.

g_senthil_mm · Post by **g_senthil_mm** » Tue Jul 24, 2018 2:28 pm

In our situation we were in UK and the bank interest was less than the allowed exemption limit in Uk and dividend was on a tax free account. So we didn't pay any taxes in UK and hence we declared in Schedule-FA and paid taxes in India.

For your situation, I think you still need to declare it in Schedule - FA. I don't know whether DTAA will come into play. It would be better to check with a CA.