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  1. #1

    Default Taxes on rental income for property in India on NRI loan?

    I have a flat in India which i bought with a NRI loan from ICICI. I have declared this property in my US taxes, now coming to the rent I started receiving last year, do I need to show it in my US taxes or India taxes? I'm guessing US as it's NRI property?

    Note: My tenant deposits rent to my India local ICICI a/c not NRI a/c.

  2. #2

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    As an NRI, you are not allowed to have a local resident account. You need to convert that account into NRO account.

    On the amount deposited in India in NRO account, you will have to pay income tax and file tax return in India. You will have to declare that income in the U.S. tax return also, and depending on your income level, you will be able to claim the tax credit based on the tax paid in India. In short, you will be paying at least the higher amount of tax between the tax rates in India and in the U.S.
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  3. #3

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    Quote Originally Posted by immihelp View Post
    you will be able to claim the tax credit based on the tax paid in India. .
    How do I claim taxes paid in India in my US taxes? I didn't know we can do that.

  4. #4

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    I am not sure whether you misunderstood this or not.

    Assume, you made $100 in India and paid $30 in tax in India.

    You have to report that $100 as income in the U.S. and lets say you need to pay $35 in tax in the U.S. on that $100. As you already paid $30 in tax in India, you will have to pay the remaining $5 ($35 - $30) in the U.S. That is the credit I am talking about. In other words, you don't pay $30 twice.

    There is no provision of getting that $30 back (the one you paid in India) anyway.
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  5. #5

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    Quote Originally Posted by immihelp View Post
    I am not sure whether you misunderstood this or not.

    Assume, you made $100 in India and paid $30 in tax in India.

    You have to report that $100 as income in the U.S. and lets say you need to pay $35 in tax in the U.S. on that $100. As you already paid $30 in tax in India, you will have to pay the remaining $5 ($35 - $30) in the U.S. That is the credit I am talking about. In other words, you don't pay $30 twice.

    There is no provision of getting that $30 back (the one you paid in India) anyway.
    I hope turbo-tax can help me do this process.

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