# Parents from india gifted property to daughter US citizen - Tax details on sale of property?



## HarperAlexas (2 d ago)

Parents from india gifted property land to daughter US citizen. If that property is sold, will there be any gift tax? Is following true::
The Indian parents are not US persons and are not liable for US tax. Accordingly, gift tax does not apply. 
As daughter is US person, required to report any gift from a foreign person if it exceeds USD 100,000 in a year. If it is less than USD 100,000, can she transfer entire amount to USA account from india without any tax payment in USA?


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## Moulard (Feb 3, 2017)

If the property is sold there will not be gift tax on the sale, because the gift has already occurred, but their could be capital gains tax on the difference between the value of the land when it was gifted, and the value of the land when it is sold - assuming it is not sold immediately. 

As we are (I assume) talking about real property located in India, the gain would primarily be taxable in India but the gain would also be taxable by the US by virtue of the fact the daughter is a US citizen. The daughter would be able to claim foreign tax credits paid or accrued to reduce the US tax payable up to the amount of Indian taxes paid.

If the property generates income between the gift and its sale, then the same would apply. The (I presume) rental income would be considered India sourced and the ITD would have the right to tax that income, the US daughter would have to also report that income to the IRS and could claim tax credits for Indian taxes paid or accrued.


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## HarperAlexas (2 d ago)

Moulard said:


> If the property is sold there will not be gift tax on the sale, because the gift has already occurred, but their could be capital gains tax on the difference between the value of the land when it was gifted, and the value of the land when it is sold - assuming it is not sold immediately.
> 
> As we are (I assume) talking about real property located in India, the gain would primarily be taxable in India but the gain would also be taxable by the US by virtue of the fact the daughter is a US citizen. The daughter would be able to claim foreign tax credits paid or accrued to reduce the US tax payable up to the amount of Indian taxes paid.
> 
> If the property generates income between the gift and its sale, then the same would apply. The (I presume) rental income would be considered India sourced and the ITD would have the right to tax that income, the US daughter would have to also report that income to the IRS and could claim tax credits for Indian taxes paid or accrued.


If the capital gain in more than $100k, it should be reported to IRS. Right? It is land. So far didn't collect any rental income. Also does capital gain apply to real estate gift?


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## 255 (Sep 8, 2018)

@HarperAlexas -- There is no $100K buffer for reporting and paying U.S. taxes on capital gains. As @Moulard stated above, you can get a tax credit for taxes paid in India to mitigate any U.S. taxes owed.

If the property is not rented, then there won't be any rental income to report.

Yes, capital gain taxes apply to the sale of gifted property. The gift of foreign property is reportable at the time of the gift, but no taxes are owed. In the U.S. Gift Taxes are paid by the giver, if required. Also, as @Moulard stated, after the gift, the property is now owned by a U.S. citizen and again, U.S capital gains taxes would apply (mitigated by any taxes paid to India.) Cheers, 255


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## Moulard (Feb 3, 2017)

Let me try to explain the sequence... using a hypothetical example

First the title is transferred (that is the gift of the property) on 1 July 2022... and the valuation of the property is 7 Lakh and the USD value on that date is 86,000 USD

The value of the gift for reporting purposes is $86k. USD

So long as the daughter has not received $14k USD in other gifts from foreign sources in 2022, then the gift of the land does not have to be reported to the IRS.

Lets fast forward to say 2025 and the daughter decides to sell the land. lets say the sale price was 8 Lakhs, and the USD value of that on the date of sale is 106,000 USD 

When figuring out capital gains, for ITD purposes it would be 1 Lakh but for US tax reporting purposes the gain would be 20k USD 

If she paid the ITD more tax than was owed to the IRS, then the tax credits would result in no tax liability, if US tax owed was greater she would owe the difference between the Indian tax and the US tax to the IRS.


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