Nri real estate investment and repatriation

Dear experts, i am looking for answer to a very unique question. If this or similar questions have been answered earlier, please guide me to the links (as i was unable to locate them myself).

Hypothetical case below.

1) I buy a flat for Rs. 50Lacs in India

2) All of the money is white and transferred from the US

3) After holding the flat for 5 years i sell it for Rs.80Lacs in India

4) What i want to understand is that is there a way i could transfer entire 80 lacs back to the US without paying LTCG in India?

5) If i buy a house in India worth 30 lacs i believe i don't need to pay any taxes. Please correct me if i got it wrong

6) If i buy a house in the US with all of the said 30 lacs or 80 lacs, would LTCG in India be except? What is the process for that? Do i simply get a CA certificate and provide it to the bank? Would bank simply allow that kind of repatriation or is there something else i need to do to NOT attract any tax liability?

7) How do i prove that the house that i am buying in the US (at a latter date) using the current money is for that purpose?

Sorry experts, if too much is being asked here. But i wanted to be as specific with my situation as i could so that i could get some advice here.

Thanks in advance to all.

Ravi

Originally posted by : RS654321

Ravi,

I think you are allowed to take Rs 50 Lac + the cost of living adjusted amount with out the LTCG.

On the remaining money you probably need to pay LTCG in India.

I do not think buying house in US matters to Indian Govt. It matters only if you buy another property in India for the entire 80 Lacs.

On the US side you would be required to declare the Capital Gains and get to deduct Foreign taxes paid in India.

My best advice to you is to get a good chartered accountant in India as well as a CPA on the US side.

Good Luck

Thanks for your answer. But this is really a confusing topic. Here's what i noticed on another forum,

https://immigrationvoice.org/forum/archive/index.php/t-24484.html

***

For long-term capital gains earned on sale of property, the tax rate is 20%. If the value is above Rs 10 lakh, the tax rate climbs to 22.66%. This applies both to residents as well as non-resident Indians (NRIs). Sec. 54 of the Income Tax Act offers a way out of paying such tax. If the capital gain amount is invested in a residential house within one year before to two years after the sale, then the capital gains earned are fully exempted from tax. In case the investor intends to construct a house, the time limit is extended to within three years of the date of sale. Of course, if only a part of the capital gain is used, the exemption would be proportional and the excess will be chargeable to tax.
Now comes the interesting part, especially for NRIs.
Nowhere does Sec. 54 specify that the new house purchased should be within India.
This means, to save capital gains earned in India, the NRI can even purchase a house in his or her own host country abroad and yet claim exemption. Why just NRIs, now even resident Indians can benefit from this rule. RBI allows an Indian resident up to $1,00,000 per annum to be invested abroad. Such investment could be even in property. So far, this was just a theoretical possibility based on a plain reading of the law. However, in a recent judgment, the Income Tax Tribunal has ruled that the exemption offered by Sec. 54 can indeed be extended to a property purchased in a foreign country.
It's not even necessary that the same amount of capital gains be used to buy the property. The assessee can very well buy the property even on mortgage (housing finance) -- as long as the conditions specified in Sec. 54 are satisfied, the exemption is available. This is because, even for properties bought using mortgage, the borrower instantly becomes the owner of the property. That he is paying his EMIs (mortgage) on the loan taken is an agreement between the lender and the borrower inter se. It has no bearing on the ownership of the property. In other words, as far as Sec. 54 is concerned, an investment has indeed been made in property. Whether it's through the mechanism of mortgage or otherwise is immaterial.
This has far reaching impact, especially on NRI investments and taxation. No one is born an NRI. Indian residents become NRIs when they go abroad for employment or business. More often than not, such persons own property in India, either the one they left behind when they went abroad and became NRIs, or one that is inherited. A number of such persons, who have set up a new life abroad definitely don't need a new property just to save on tax. Now, such persons can actually consider buying property abroad and claim tax benefits in India.

***

See the link for info from CAClubindia.com (web site for finance professionals in India)

/judiciary/judiciary_detail.asp?judiciary_id=39

Court : Tribunal

Brief : : Section 54 does not prohibit from purchasing property in a foreign country however all other conditions should be satisfied.

Citation : Mrs. Prema P. Shah (2) Sanjiv P. Shah Vs. I.T.O.

Judgment :

Capital Gain - exemption u/s 54
(1) Mrs. Prema P. Shah (2) Sanjiv P. Shah Vs. I.T.O. 11/29/2005
(2006) 282 ITR (AT) 211 (Mumbai)

Case Fact: Whether it is necessary to purchase new residential property in India to utilise the sale proceeds as received on sale of residential property, not acquired in convertible foreign exchange, for claiming exemption u/s 54(1) and whether the new property can be acquired on perpetual lease?

Decision: Held by the Ho"ble Bench that section 54 does not prohibit from purchasing property in a foreign country however all other conditions should be satisfied.The Bench also observed that the assessee should be the absolute owner of the new property in order to claim the exemption.

I had recently contacted a CA in India for this very purpose and was told that there is a restriction that money earned from sale of a property in India needs to be reinvested in another property in India only within the timeline you mention below to avoid paying capital gains tax.

If a resident of India wants to invest in a property abroad using money coming from a sale of property in India - then one has to pay capital gains tax first. Again my question was related to being a resident of India and not NRI who wants to do this - but I doubt the law would be any different for the two in this case.

Just my two cents ... you may want to get proper advice from a CA in India as well. Please share what you find out as I am sure others on this thread including me would be interested in this information!