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  #16 (permalink)  
Old 10-30-2012, 03:26 PM
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Originally Posted by cdeneo View Post
Thanks DSLStart - your info gives me the necessary ammunition to go back to the CA who gave me the information I had quoted and get clarifications on the same.
Many of these CA's are asses. I have come across so many ..
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  #17 (permalink)  
Old 10-30-2012, 10:12 PM
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Default US residential mortgage is subject to state laws

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Originally Posted by go_guy123 View Post
If your home in India is paid for, give it on rent. If you have zero equity/negative equity in the house in US. It makes no financial sense to do this.
US residential mortgage is a non-recourse loan as per law i.e. it is a out of money call option. Foreclosure is a better option. Even millionares have used this clause to get rid of messy liabilities.
Note:foreclosure is not bankruptcy
This information is NOT correct. The nature of US residential mortgage in terms of recourse vs. non-recourse is driven by state laws. For example, in Maryland, it is a recourse loan and the bank can come after other assets of yours through a deficiency judgement against you. Please look at the state where your house is to figure out the mortgage's nature.

You also make foreclosure sound like it's not as bad as bankruptcy. Foreclosure is not technically bankruptcy but what it does to your credit score is pretty bad. In fact, if you don't pay your mortgage for even 2 monthly cycles, your credit score takes a big hit. If you don't pay the 3rd mortgage installment, your score could go down by 200 (or more) points after which it is very difficult to restore your credit score. If you have a job in USA and intend to be employable in any decent industry, you won't want such items to show on your credit score.
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  #18 (permalink)  
Old 10-31-2012, 01:15 PM
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Originally Posted by DSLStart View Post
For long-term capital gains earned on sale of property, the tax rate is 20%. If the value is above Rs 10 lakh, the tax rate climbs to 22.66%. This applies both to residents as well as non-resident Indians (NRIs). Sec. 54 of the Income Tax Act offers a way out of paying such tax. If the capital gain amount is invested in a residential house within one year before to two years after the sale, then the capital gains earned are fully exempted from tax. In case the investor intends to construct a house, the time limit is extended to within three years of the date of sale. Of course, if only a part of the capital gain is used, the exemption would be proportional and the excess will be chargeable to tax.
Now comes the interesting part, especially for NRIs.
Nowhere does Sec. 54 specify that the new house purchased should be within India.
This means, to save capital gains earned in India, the NRI can even purchase a house in his or her own host country abroad and yet claim exemption. Why just NRIs, now even resident Indians can benefit from this rule. RBI allows an Indian resident up to $1,00,000 per annum to be invested abroad. Such investment could be even in property. So far, this was just a theoretical possibility based on a plain reading of the law. However, in a recent judgment, the Income Tax Tribunal has ruled that the exemption offered by Sec. 54 can indeed be extended to a property purchased in a foreign country.
It's not even necessary that the same amount of capital gains be used to buy the property. The assessee can very well buy the property even on mortgage (housing finance) -- as long as the conditions specified in Sec. 54 are satisfied, the exemption is available. This is because, even for properties bought using mortgage, the borrower instantly becomes the owner of the property. That he is paying his EMIs (mortgage) on the loan taken is an agreement between the lender and the borrower inter se. It has no bearing on the ownership of the property. In other words, as far as Sec. 54 is concerned, an investment has indeed been made in property. Whether it's through the mechanism of mortgage or otherwise is immaterial.
This has far reaching impact, especially on NRI investments and taxation. No one is born an NRI. Indian residents become NRIs when they go abroad for employment or business. More often than not, such persons own property in India, either the one they left behind when they went abroad and became NRIs, or one that is inherited. A number of such persons, who have set up a new life abroad definitely don't need a new property just to save on tax. Now, such persons can actually consider buying property abroad and claim tax benefits in India.
Very informative DSLStart. Thanks.
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  #19 (permalink)  
Old 11-17-2017, 06:38 PM
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Default Selling house in India and repatriate proceeds to US

I want to sell my house in India. I am getting 51Lac rupees for home bought in 2003 for 9Lac rupees.

How to bring that proceeds legally into US bank. Most likely we may want to reinvest into our existing mortgage.

Kindly share the advice or experience.
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