Property tax — TDS, cap gains, FATCA
Stamp duty, TDS on rent, capital gains, DTAA credits abroad, US FATCA reporting. The full tax stack from purchase through exit.
Paid to the state govt at registration. Rate varies — Maharashtra 6%, Karnataka 5.6%, Tamil Nadu 7%, Delhi 6% (4% for women buyers). Plus 1% registration fee.
- Maharashtra (Mumbai/Pune): 6% + 1% = 7% on property value
- Karnataka (Bangalore): 5.6% + 1% = 6.6%
- Tamil Nadu (Chennai): 7% + 1% = 8%
- Delhi/NCR: 6% (men) or 4% (women)
- Goa: 4–6% based on slab
Annual tax to local municipal corporation (BMC, BBMP, MCG etc.). Rate varies by city + property zone. Pay online through municipal portal — most accept Indian + international cards.
- Mumbai (BMC): ~₹15K-50K/yr for a 1cr flat
- Bangalore (BBMP): ~₹8K-25K/yr for a 1cr flat
- Pay online: mcgm.gov.in, bbmp.gov.in
Tenant must deduct 30% from rent before paying NRI landlord. Deposit it in your name via Form 26QC. You claim refund/credit when filing ITR-2.
- Tenant pays you ₹70 of every ₹100 rent — 30% goes to govt
- You file ITR-2: claim deductions (loan interest, 30% std deduction), get refund if effective tax < 30%
- NRO account only: Indian rental income MUST flow through NRO, never NRE (FEMA rule)
- Joint owner workaround: If 50/50 with resident spouse, each owner files separately — only NRI half is TDS-30%
Sold property held more than 24 months? LTCG at 12.5% on the gain (post-2024 budget — was 20% with indexation before). No indexation benefit anymore.
- Calculation: Sale price - (Purchase + Stamp duty + Registration + Improvement costs)
- Section 54 exemption: Reinvest in another residential property within 2 years to avoid LTCG entirely
- Section 54EC: Invest in NHAI/REC bonds within 6 months (₹50L cap, 5-year lock-in) to claim exemption
- Buyer's TDS: Buyer must deduct 12.5% (LTCG-rate) or 20% if STCG, deposit via Form 27Q
Sold within 24 months? Pay STCG at 20% (post-2024 budget — was at slab rates earlier). No exemptions available. Best avoided by timing sales past the 2-year mark.
Indian property tax (rent + capital gains) is creditable against equivalent foreign tax — you won't pay twice on the same income.
- US: Form 1116 (Foreign Tax Credit) on rental + capital gains
- UK: Foreign tax relief on Self Assessment
- Canada: Foreign tax credit on T1, plus FBAR-equivalent T1135
- Australia: Foreign Income Tax Offset on annual return
If you're a US tax resident (citizen, green card, substantial presence), Indian property reporting requirements:
- Form 8938 (FATCA): Required if specified foreign financial assets > $50K (single) or $100K (joint) abroad. Indian property values count.
- FBAR (FinCEN 114): Indian bank accounts (where rent is credited) > $10K aggregate any time during the year
- 1040 Schedule E: Report Indian rental income as foreign rental, claim DTAA credit on Form 1116
- Section 121 exclusion: $250K/$500K capital gains exclusion on primary residence — only applies to US property, NOT Indian
Net sale proceeds (post-TDS) land in your NRO account. To wire them out:
- Form 15CA Part C: Self-declaration with payment + tax details
- Form 15CB: Chartered Accountant certificate confirming taxes paid
- Form A2: RBI form for purpose of remittance
- Annual cap: $1M/year per NRI on NRO repatriation (separate from LRS)
Time the sale past 24 months. Use Section 54. Get a US-India CPA before exit.
The biggest tax move: hold past the 24-month mark to flip from 20% STCG to 12.5% LTCG (saves ₹15L on a ₹2cr gain). Section 54 reinvestment exemption can defer/eliminate LTCG entirely if you're rolling into another property. US-NRIs especially need a CPA who handles both sides — the DTAA reconciliation alone can save 5-11% of additional US tax.
→ Flip 20% STCG to 12.5% LTCG
7.5% rate gap on a ₹2cr gain = ₹15L saved. Always worth waiting if you're 23 months in.
→ Section 54 exemption (no cap)
Roll proceeds into another residential property to defer LTCG entirely. Common pattern for NRIs upgrading from 1BHK to 2BHK or moving cities.
→ Cross-border tax pro
DTAA reconciliation, Form 8938, FBAR, Schedule E rental reporting. ~$1,500/year + extra at sale. Saves 5-11% of incremental US tax.