Taxes for selling property in India from the US: Complete guide

If you want to sell your property in India from the US, the questions can start piling up fast. Will you owe taxes in India, the US, or both? How much will the Indian government take before you see your money? Can you even move your sale proceeds to your US bank account?

To give you a short answer, Americans selling property in India face tax obligations in both countries. You'll pay capital gains tax to the Indian government first, and then report the sale to the IRS. However, you may not actually owe any US tax, depending on how much you pay in Indian capital gains.

Here's everything you need to know about the taxes you'll pay when selling Indian property, as well as other important financial considerations to think about.

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Table of contents
What properties can I sell in India as an American? What types of taxes do I need to pay when selling property in India as an American? Are there any tax exemptions I should be aware of? What taxes do I need to pay in the US for selling property in India? Required documents for selling property in India as an American

What properties can I sell in India as an American?

All of them, but there are certain restrictions to be aware of.

You can sell residential or commercial properties to either Indian residents or other NRIs and Persons of Indian Origin. But agricultural land, farmhouses, and plantation properties follow different rules.

By law, Americans can't purchase these property types in India, and if you inherited a property like that, you'd have to sell it within a specific timeframe to an Indian resident. You won't be able to sell to another NRI or foreign national.¹

Another important restriction to be aware of is that if you sell agricultural land, farmhouses, or plantation property, the proceeds must stay in India—you can't transfer that money to the US.

For residential and commercial property sales, you can move the money to your US bank account, but with limits. The cap is 1 million USD per financial year, but keep in mind that this limit covers all your transfers from India, not just property sales.²

What types of taxes do I need to pay when selling property in India as an American?

Your main tax obligation when selling property in India is capital gains tax. This tax applies to the profit you make from the sale, not the total sale price.

Beyond capital gains tax, you'll also deal with TDS (Tax Deducted at Source), where the buyer withholds a portion of the payment before it reaches you.

Capital gains and TDS are the main tax obligations, but you'll also pay different transaction fees that add to your total costs.

Let's take a closer look:

Capital gains tax

Capital gains tax is the tax on the profit you earn from selling your property.

The Indian government calculates this by taking your sale price and subtracting what you originally paid for the property, any improvements you made, and your selling expenses.

The tax rate in India depends on how long you have owned the property.

If you sell within 24 months of buying it, you pay short-term capital gains tax. But if you hold it longer than 24 months, you qualify for long-term capital gains tax at a lower rate.²

Here are the capital gains tax rates in India:

Holding period	Type of gain	Tax rate²
More than 24 months	Long-term capital gains	12.5%
24 months or less	Short-term capital gains	According to your Indian income tax bracket

For inherited property, the holding period includes the time the previous owner held it.

💡 For example, if your parents bought the property 15 years ago and you inherited it 2 years ago, your total holding period is 17 years, which qualifies you for the long-term rate.

TDS deduction

TDS stands for Tax Deducted at Source.

When you sell property in India as a non-resident, the buyer must deduct tax from your payment before giving you the money. They send this deducted amount to the Indian tax authorities on your behalf.

The TDS rates are:²

• Long-term gains: 12.5% plus surcharge and cess
• Short-term gains: 30% plus surcharge and cess

The buyer calculates TDS on the entire sale amount, not just your profit.

This often results in the buyer deducting more tax than you owe, but you can reduce this deduction by applying for a lower deduction certificate under Section 197. With this certificate, the buyer only deducts tax on the capital gains.

If the buyer deducts too much TDS, you'll get the excess back as a refund when you file your Indian tax return and attach supporting documents.

Other fees

When you're selling property in India, there are a few other costs you need to be aware of, in addition to taxes, including:

• Stamp duty (ranges from 4% to 10%)³
• Registration charges (1% of the property value)³
• Legal fees
• Real estate agent commission
• Property valuation fees
• Chartered Accountant fees

While these costs are much lower than the capital gains tax, they're still important to include in the budget for your property sale. You'll need to have enough money in your Indian bank account to make these payments.

Are there any tax exemptions I should be aware of?

Section 54

You can use Section 54 when you sell a residential property and want to avoid tax on the long-term capital gains. To claim this exemption, you must buy or construct another residential property in India.

You can purchase the new property up to 1 year before the sale or within 2 years after the sale. If you're constructing a new house, you have 3 years from the sale date to complete it.²

You only need to reinvest the capital gains amount and not the entire sale proceeds.

Section 54F

Section 54F covers sales of any capital asset except residential property, so it applies when you sell commercial property, land, or other non-residential assets.

The main difference from Section 54 is that you must invest the entire net sale consideration (the full amount you receive after paying expenses), not just the capital gains. If you only reinvest part of the proceeds, your exemption is proportional to what you invested.

Just like with Section 54, you can purchase a residential property within 1 year before or 2 years after the sale, or construct one within 3 years after the sale.²

Naturally, the new property must be in India.

Section 54EC

Section 54EC lets you avoid long-term capital gains tax by investing in government bonds instead of buying property.

To qualify, you can invest up to 50 lakhs in bonds issued by authorities like the National Highways Authority of India (NHAI) and the Rural Electrification Corporation (REC) within 6 months of the property sale.²

These bonds have a 5-year lock-in period, so you won't be able to sell them or use them as collateral during that time, or you'll lose the exemption and have to pay the tax.²

What taxes do I need to pay in the US for selling property in India?

As a US citizen or resident, you must report your worldwide income to the IRS. This includes all of your income in India, such as from a property sale.

You'll need to report the sale on your US tax return even if you've already paid taxes in India, but you typically won't pay tax on the same income twice. Instead, you can use the Foreign Tax Credit to claim a credit for the Indian capital gains tax you paid.

If your Indian tax bill is higher than what you'd owe in the US, you generally won't owe any additional US tax. If your US tax obligation is higher, you only pay the difference.

However, to qualify for the Foreign Tax Credit, all of your paperwork must be filled out correctly with all of the necessary proof. It's a good idea to consult with a tax professional or a lawyer to make sure you don't overpay in US taxes.

Required documents for selling property in India as an American

The exact documents you'll need to sell your property in India can vary, but here's what you can generally expect:

• Passport
• PAN card
• Property title deed and all previous transfer deeds
• Sale deed showing the transaction details
• Encumbrance certificate
• Municipal approvals and No Objection Certificates
• Power of Attorney, if selling remotely
• NRO or NRE account details for receiving the sale proceeds

Once your property sale is complete, you'll need another set of documents to transfer the money to the US. Typically, this set includes:

• Tax computation showing your capital gains calculation
• TDS certificates from the buyer
• Form 15CA
• Form 15CB
• Copy of your Indian tax return showing the property sale
• Proof of property acquisition
• Bank account details for receiving the funds in the US

Your lawyer should be able to walk you through the process and give you more personalized guidance on the different documents you'll need to complete the sale and repatriate your funds in USD.

Bottom line

If you're a US citizen or resident selling property in India, you'll have to pay capital gains tax to the Indian government and then report the sale to the IRS.

However, you can typically avoid double taxation using the Foreign Tax Credit—but make sure to get help from a qualified tax professional or a lawyer to do the paperwork correctly.

You'll also have to budget for TDS deductions, transaction fees, and professional services like Chartered Accountants who help with repatriation of funds.

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Sources

1. iNRI - NRI’s Guide to Selling Property in India
2. Taxes for Expats - Selling Indian property as an NRI & US taxpayer
3. Urban Money - Stamp Duty and Registration Charges

Sources checked 12/09/2025