Capital gains tax for us citizen

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Querist : Anonymous

Querist : Anonymous (Querist)

28 January 2012 Hello,

I am a US Citizen and I bought a piece of residential Land in Delhi in 1992 when I had a US green card. I want to sell that land and buy a flat in Delhi with the proceeds. I have narrowed down a flat which will cost approximately the money I get from selling my residential Land. My question is related to the tax I would have to pay in India and USA.

1)From what I have read I shouldn't have to pay any capital gains tax in India since I am investing all the money in a flat in India? Am I correct? At least that's what I got from reading Sec 54.

2)What about the USA? Will I have to pay capital gains tax there? I have read that the tax I pay in India (that is if I have any) is deductible on my US tax return. Is that true and if so is that always the case or are there any special conditions attached to it?

Thanks

CA. Anuj Gupta

CA. Anuj Gupta (Expert)

28 January 2012 1.Sec 54 talks of residential house property whereas you are selling a residential plot.

2.You please consult an US consultant for the same.

Also you were a US Resident when you purchased the property, the issue arises whether that transaction was permitted under FERA.

Anuj
+91-9810106211
femaquery@gmail.com

CA. Krishna K Neeraj

CA. Krishna K Neeraj (Expert)

30 January 2012 Being a US citizen, you are liable for taxation on your global income whereas in India, you are liable for Capital Gain Tax on sale of your residential plot purchased in 1992.

1. I agree with Anuj that exemption is not available to you u/s 54 HOWEVER YOU WILL BE ELIGIBLE FOR EXEMPTION UNDER SECTION 54F. You need not to pay any capital gain tax since you have invested all the money in residential property.

2. For USA angle, please consult your US consultant.

Krishna
9999777166
kkn@knaca.in

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