How to Bring Money From India to USA After Selling Property

Transferring funds from India to the United States after selling property involves regulations and tax obligations in both countries. Understanding the rules for outward remittances from India and U.S. reporting requirements ensures a smooth and compliant transfer, preventing delays or legal issues.

Indian Regulatory Framework for Repatriation

The Reserve Bank of India (RBI) and the Foreign Exchange Management Act (FEMA) govern outward remittance of funds from India, including property sale proceeds by Non-Resident Indians (NRIs) or Overseas Citizens of India (OCIs). Property sale proceeds credit to a Non-Resident Ordinary (NRO) account, used for income earned in India. Non-residents can repatriate up to USD 1 million per financial year (April to March) from their NRO account.

If property was acquired using foreign currency or funds from a Non-Resident External (NRE) or Foreign Currency Non-Resident (FCNR) account, the entire sale proceeds may be repatriated. Repatriation of residential property sale proceeds is restricted to a maximum of two properties in a lifetime. For properties acquired using rupee funds or from an NRO account, the USD 1 million annual limit applies, regardless of properties sold. If the amount exceeds USD 1 million, RBI approval must be sought through an authorized dealer bank.

A Chartered Accountant’s certificate (Form 15CB) is required for remittances to a non-resident exceeding ₹5 Lakh. This certificate confirms tax obligations have been met, including any capital gains tax in India. The Chartered Accountant verifies the transaction, checks taxability, calculates Tax Deducted at Source (TDS), and certifies details. After Form 15CB issuance, the remitter must file an online declaration in Form 15CA with the Indian Income Tax Department.

The bank facilitating the transfer will require these forms and other supporting documentation, including:
The property’s sale deed
Proof of original acquisition
Copies of the seller’s PAN card and passport
Bank statements showing the deposit of sale proceeds into the NRO account

These steps ensure funds are legally sourced and Indian taxes paid before transfer. Repatriation of proceeds from agricultural land, farmhouses, or plantation property is not permitted, or is subject to the USD 1 million NRO account limit.

US Tax and Reporting Obligations

Individuals in the United States must comply with U.S. tax and reporting obligations upon receiving funds from overseas. The Internal Revenue Service (IRS) taxes U.S. citizens and residents on their worldwide income, which includes capital gains from the sale of foreign property. Gains must be reported on a U.S. tax return using Form 8949 and Schedule D.

To prevent double taxation on income already taxed in India, U.S. taxpayers may claim a foreign tax credit. This credit, reported on Form 1116, allows a reduction in U.S. tax liability by the amount of income tax paid to a foreign country. Maintain records of all taxes paid in India to accurately claim this credit. If the foreign property was a primary residence, a capital gains exclusion may apply, allowing single filers to exclude up to $250,000 and married couples filing jointly to exclude up to $500,000 of gain, provided ownership and residency tests are met.

Beyond income tax, reporting requirements exist for foreign financial accounts. The Bank Secrecy Act requires U.S. persons to report a financial interest in, or signature authority over, foreign financial accounts if the aggregate value of all such accounts exceeds $10,000 at any point during the calendar year. This is done by filing FinCEN Form 114 (FBAR) electronically. The FBAR is a reporting requirement and is separate from income tax forms.

The Foreign Account Tax Compliance Act (FATCA) also imposes reporting obligations for U.S. persons holding foreign financial assets. This is accomplished by filing Form 8938, attached to the annual income tax return. Thresholds for filing Form 8938 vary based on filing status and whether the individual resides in the U.S. or abroad. For single individuals living in the U.S., the threshold is $50,000 at year-end or $75,000 at any point during the year; for married couples filing jointly, it is $100,000 at year-end or $150,000 at any point. These reporting requirements ensure transparency regarding foreign assets; non-compliance can result in penalties.

Executing the Fund Transfer

Once Indian regulatory approvals and documentation are in place, and U.S. tax implications understood, the physical transfer of funds from India to the U.S. can be initiated. The most common and secure method for transferring large sums internationally is a wire transfer, facilitated through an authorized dealer bank in India. This process moves funds directly from the NRO account in India to a designated U.S. bank account.

To initiate a wire transfer, the Indian bank will require specific details about the recipient’s U.S. bank account. This information includes:
Full name and address of the beneficiary
Name and address of the U.S. bank
The U.S. bank’s SWIFT/BIC (Society for Worldwide Interbank Financial Telecommunication/Bank Identifier Code) code
The beneficiary’s account number

Providing accurate details is important to avoid delays or complications in the transfer process. Some Indian banks may also require additional forms, such as Form A2, to process the foreign exchange transaction.

Currency conversion occurs during the transfer, where Indian Rupees are converted to U.S. Dollars at the prevailing exchange rate offered by the sending bank or an intermediary. Exchange rates can fluctuate, and banks typically apply a markup to the interbank rate, which can affect the final amount received. It is advisable to inquire about the exchange rate and any associated transfer fees before initiating the transaction.

International wire transfers generally take between one to five business days to complete. However, factors that can sometimes extend this timeline include:
Time zone differences
Bank holidays in either country
Intermediary banks
Compliance checks