Updated November 2026 · VG CPA PC advisors
Computing the gain in dollars
US gain is calculated in dollars: the sale price converted at the exchange rate on the sale date, minus the cost converted at the rate on the purchase date, plus improvements converted when made. Because the rupee has weakened over time, the dollar gain is often smaller than the rupee gain.
Inherited property generally gets a basis equal to its fair market value at the date of death, so a valuation as of that date is valuable.
Indian tax and the foreign tax credit
India taxes the sale and buyers usually withhold tax (TDS) from non-residents, often at rates higher than the final liability. Claim any excess TDS as a refund in India; the US credit is only for tax actually owed to India.
India's tax year runs April to March, so timing differences must be handled carefully on Form 1116. Long-term gains are reported in the passive or general category depending on the facts.
Principal residence, reporting and repatriation
If the property was your principal residence for two of the five years before sale, the US home sale exclusion of up to $250,000 ($500,000 joint) can apply, even for a foreign home.
Sale proceeds deposited in Indian accounts increase FBAR and Form 8938 values. Bringing money to the US is not taxable itself, but keep documentation of the source, and consider currency gain or loss on foreign-currency mortgages.