The House and Other US Assets

A US home, a brokerage account and a bank balance are all easy to keep after you move, and each is taxed differently once you are a nonresident. This chapter covers what happens when a home is sold before or after you leave, what renting it out from India means, how the US treats a nonresident's investments, what the US estate tax does to assets you keep, and what India asks about all of it once you are a resident. The US rules are IRS rules as of 2026. The Indian rules are as published on 2 October 2026.

Selling the home

While you are still a US resident. There is no FIRPTA withholding, because the buyer's withholding duty applies only when the seller is a foreign person. You certify that you are not one. The gain may be eligible for the home-sale exclusion: up to $250,000 of gain for a single owner and up to $500,000 for a married couple filing jointly, if you owned and used the home as your main home for at least two of the five years before the sale (IRS Publication 523).

After you have become a foreign person. The exclusion is not lost by leaving. The two-in-five-years test counts back from the sale date, so a home that was your main home until you moved can still qualify for up to three years after, and Publication 523 does not treat the part of the five years before the sale that falls after you last used the home as your main home as non-qualified use, so renting it out after you move does not by itself shrink the exclusion. Depreciation you claimed while renting it is recaptured in the gain. What changes is the withholding. The Foreign Investment in Real Property Tax Act makes the buyer withhold 15% of the amount realized, which is the price, not the gain. The IRS applies a reduced withholding rate where the buyer will use the property as a residence and the price is above $300,000 but not above $1,000,000, and no withholding where the price is at or below $300,000 (IRS, FIRPTA withholding). The buyer must have definite plans to live there for at least half of the days it is used in each of the first two years. The seller can ask the IRS for a withholding certificate on Form 8288-B to cut the amount withheld, and files Form 1040-NR to settle the real tax and claim back any excess.

A home bought for $450,000 that grows at 4.0% a year is worth $615,856 after 8 years, a gain of $165,856, which is inside the single-owner exclusion of $250,000. Held to 14 years it gains $329,254, above that amount. The exclusion is capped, so a home that keeps rising while you live abroad can leave a taxable part, which is one reason to compare selling now with holding. Because the buyer withholds on the price and not on the gain, the amount held back can far exceed the tax actually owed, which is why sellers ask for a certificate before closing.

The Indian side of a sale. In a non-resident or RNOR year, a gain on a US home that arises and is received in the US is outside the Indian net (section 5). In a ROR year it is part of worldwide income. The 2025 Act taxes a long-term gain on an asset other than listed equity at 12.5% (section 197(1)), and a house counts as long term when held for more than 24 months (section 2(101)). For a resident individual who sells land or a building acquired before 23 July 2024, section 197(3) ignores any tax above what 20% on the indexed gain would give. The section's words do not limit it to land in India, and whether the relief is meant to reach a house abroad is a point to put to your CA. The US tax on the same sale is relieved through the credit described below.

Renting it out from India

Rent paid to a nonresident is taxed at 30% of the gross, with no deductions, unless you choose to treat the rental income as effectively connected with a US trade or business (IRS Publication 519). The choice lets you deduct expenses, mortgage interest and depreciation and pay tax on the net, at graduated rates, on Form 1040-NR. It covers all of your US real property income, so the decision is for the whole portfolio, and it has its own paperwork with the property manager.

India's side depends on your status. In a non-resident or RNOR year, rent on a US property that arises and is received in the US is outside the Indian tax net (section 5). In a ROR year it is part of worldwide income, and the US tax you paid is relieved through the treaty and the foreign tax credit rules: India allows a deduction for US income tax paid, limited to the Indian tax on that income (Article 25(2)), and a US citizen or green card holder claims a credit in the US for any Indian tax (Article 25(1)).

Investments you keep in the US

A nonresident alien who is neither a citizen nor a green card holder is not generally taxed by the US on capital gains from selling securities. Publication 519 taxes a nonresident's net gain from US sources at 30% only if they were in the US for 183 days or more in the tax year, and otherwise leaves such gains untaxed unless they are effectively connected with a US business. Dividends are different. US-source dividends are subject to the 30% default withholding, which the India-US treaty caps at 25% for an individual shareholder (Article 10) once you give the broker a Form W-8BEN. Firms differ on whether they keep accounts for a customer with a foreign address, so ask in writing before you go.

On the Indian side, the position is the one in chapter 2. A sale in an RNOR year is outside the Indian net. From the first ROR year, the gain is part of worldwide income, and a resident must list foreign assets on the return (chapter 8).

The US estate tax on what you keep

This is the rule that surprises families who leave and keep US investments. A person who is not a US citizen and not domiciled in the US is taxed on US-situated assets, and the protection is small: the executor must file Form 706-NA when those assets plus certain lifetime gifts exceed $60,000 (IRS, nonresident estate tax). US real estate and shares of US companies, including US funds, count as US-situated. Ordinary bank deposits generally do not. India is not on the IRS list of estate tax treaties, so there is no treaty exemption to claim. The chapter "Estate Rules for People Who Are Not Citizens" in the visa shelf's third book works through the figures.

Some households keep a US home and a US brokerage account on purpose, for visits, children or a possible return. The estate rule does not make that wrong. It makes the choice a priced one, with the home and the shares counted at their full value, and it is one more reason to name beneficiaries and keep a list of accounts where the family can find it.