Selling inherited property in India from the US: Complete guide

You've inherited property in India, and now you want to sell it from the US. You probably have questions: Can you even sell property in India as an American? Is it possible to do the sale without being physically present? What about taxes in both countries?

Americans can inherit and sell property in India, but the process comes with a few unique challenges. You'll need to navigate Indian property laws, FEMA regulations, and tax requirements in both India and the US.

Let's take a closer look at all the aspects of selling your inherited Indian property.

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Table of contents
Can an American inherit property in India? How to determine the worth of your inherited property in India What to consider when selling an inherited property in India from the US Documents required to sell property in India as an American How to sell property in India: step-by-step Costs of selling property in India Tax implications when selling an inherited property in India

Can an American inherit property in India?

Yes, Americans can inherit residential and commercial property in India.

The Foreign Exchange Management Act (FEMA) governs how foreigners can own property in India, and under FEMA, you can inherit property from an Indian citizen who's related to you by blood.¹

However, there's a restriction that applies to agricultural land and farmhouses. As a foreigner or NRI (Non-Resident Indian), you can inherit them, but you can't keep them indefinitely. You'll need to sell them within a specific timeframe.

If you have Persons of Indian Origin (PIO) or Overseas Citizen of India (OCI) status, the rules are slightly easier for you than for other foreigners, but even PIOs and OCIs can only inherit agricultural land, not purchase it.

How to determine the worth of your inherited property in India

It's important to know your inherited property's value for 3 reasons: calculating taxes in India and the US, dividing assets fairly among multiple heirs, and setting a realistic sale price.

Fair Market Value (FMV) is what your property would sell for in the open market. In other words, it's what a willing buyer would pay a willing seller under normal conditions.

Here are your main options for determining your property's value:

• Hire a government-approved property valuer: This gives you the most authoritative valuation report, which Indian tax authorities will accept without question
• Get a Comparative Market Analysis (CMA) from real estate agents: They'll compare your property to similar ones that recently sold in the area
• Check the circle rate (also called guidance value or ready reckoner rate): This is the minimum value the state government sets for properties in each area

For inherited property, the holding period includes the time the previous owner held it.²

For example, if your parent bought the property 20 years ago and you inherited it last year, your total holding period is 21 years. This will be important for tax calculations.

What to consider when selling an inherited property in India from the US

Who you can sell to

You can sell your property to Indian citizens without any restrictions, and they can buy any type of property from you.

If you're selling to Non-Resident Indians (NRIs) or Overseas Citizens of India (OCIs), they can only buy residential or commercial properties. They can't buy agricultural land, farmhouses, or plantation properties from you.

Repatriation restrictions

Moving your sale proceeds out of India to the US has limits.

You can repatriate up to 1 million USD per financial year (April to March), and this limit covers all your transfers from India, not just property sales.²

If you're selling residential property that was purchased with foreign currency (through an NRE or FCNR account), you can only repatriate proceeds from a maximum of 2 residential properties in your lifetime.²

💡 For agricultural land sales, you can't repatriate those proceeds abroad at all. The money must stay in India.

Getting power of attorney

Unless you plan to travel to India for the sale, you'll almost certainly need a Power of Attorney.

This legal document allows a trusted person in India to handle the sale process on your behalf, including signing documents, dealing with buyers, and managing the registration process.

You'll need to get the POA notarized in the US, attested by the Indian Consulate, and then registered in India.

Tax implications

You have tax liabilities both in India and in the US.

In India, you'll owe capital gains tax, which is 12.5% on long-term gains (if you've held the property for more than 24 months) or according to your income tax bracket on short-term gains.³

The US also requires you to report the sale and pay taxes on any gains, though you can claim a foreign tax credit for the Indian taxes you paid to avoid double taxation.

TDS considerations

When you sell property in India as a non-resident, the buyer is legally required to deduct Tax Deducted at Source (TDS) before paying you. They'll deduct 12.5% plus surcharge and cess for long-term gains, or 30% plus surcharge and cess for short-term gains.³

TDS is calculated on the entire sale amount, not just your profit.

You can apply for a lower deduction certificate under Section 197 if you want the buyer to deduct tax only on your actual capital gain instead of the full sale price.³ If too much TDS is deducted, you'll get it back when you file your Indian tax return.

Timeline considerations

Selling property in India isn't quick.

The entire process, including transferring ownership to your name, finding a buyer, completing the sale, and registering the transaction, can take anywhere from a few months to over a year.¹

Documents required to sell property in India as an American

Selling inherited property in India requires a lot of paperwork. You'll need documents to prove you inherited the property, complete the sale, and transfer money out of India.

Here's what you need at each stage.¹²³

For establishing inheritance:

• Death certificate of the deceased, certified by a medical practitioner
• Legal heir certificate
• Will, if one exists (may need to go through probate court)
• Your passport and other identification documents
• Original property title deed and all previous transfer deeds

For the sale transaction:

• PAN card (mandatory for all property transactions in India)
• Sale deed and title deed
• Encumbrance certificate (proves that the property has no legal claims against it)
• Municipal approvals and No Objection Certificates
• Power of Attorney, if you're handling the sale remotely (must be notarized in the US and attested by the Indian Consulate)

For repatriation:

• Tax computation showing your capital gains calculation
• TDS certificates from the buyer
• Form 15CA (your self-declaration of tax compliance)
• Form 15CB (issued by a Chartered Accountant confirming your tax liability)
• Your NRO or NRE account details

Some documents, like the legal heir certificate and probate, can take time to obtain, so plan for getting them as early as possible for a smooth process.

If you're missing any property-related documents, you may need to request copies from local government offices in India, which is another reason to set up a Power of Attorney for your lawyer or another person who's helping you on the ground in India.

How to sell property in India: step-by-step

1. Transfer ownership to your name

Before you can sell the property, you need to register it in your name. To do this, you'll take your inheritance documents to the sub-registrar of assurances in the area where the property is located.

You'll submit the death certificate, legal heir certificate or will, and property documents. You'll also usually pay registration costs, and, depending on your state, stamp duty. However, these aren't always applicable.

2. Get property valuation

You need to know what your property is worth before listing it. Typically, the best way to do this is to hire a government-registered valuer for an official Fair Market Value report.

You can also get a Comparative Market Analysis from real estate agents to see what similar properties recently sold for, and check the circle rate (the minimum value set by the government) for your area.

3. Draft a power of attorney

If you're not traveling to India for the sale, you'll need a power of attorney. Work with a lawyer to draft a POA document, get it notarized in the US, and have it attested at the Indian Consulate or Embassy.

Then, send the attested document to India, where your representative will register it with the sub-registrar.

4. Find a buyer

The most common way to find a buyer for your property in India is the same as in the US—listing it through a real estate agent.

They'll charge you a commission, but you won't have to worry about marketing and buyer vetting, which is important if you're not living in India.

Once you have a serious buyer, negotiate the sale price and payment terms.

5. Negotiate and prepare the sale deed

Work with a lawyer to draft the sale agreement. This document should include:

• Complete property details and boundaries
• Final sale price
• Payment terms and timeline
• Any conditions of the sale

Both you (or your POA representative) and the buyer must sign the agreement in the presence of witnesses.

6. Receive the payment

The buyer must deduct TDS before paying you. This is legally required for non-resident sellers.

The deducted amount goes to the Indian tax authorities, and the remaining balance gets deposited into your NRO or NRE bank account.

Make sure you get a TDS certificate from the buyer showing how much tax was deducted because you'll need this when filing your tax return.

7. Register the sale

Take the signed sale deed to the sub-registrar's office to officially transfer ownership to the buyer.

You'll pay stamp duty (typically 4% to 10% of the property value, depending on the state) and registration charges (usually 1% of the property value).⁴

Once processed, you'll receive the registered sale deed as proof that the sale is complete.

8. File tax returns in India

File an Indian tax return reporting your capital gains from the property sale.

This is where you can claim exemptions under Sections 54, 54F, or 54EC if you reinvest the proceeds in specific ways. If the buyer deducted more TDS than your tax liability, you'll get a refund after filing your return. You'll need a Chartered Accountant to help with this.

9. Repatriate funds

To transfer your sale proceeds out of India, submit Forms 15CA and 15CB to your bank along with your tax documents and TDS certificates.

Form 15CA is the self-declaration that you've met all tax requirements, and Form 15CB is a certificate from your Chartered Accountant confirming your tax calculations.³

Your bank will process the transfer up to the 1 million USD annual limit.²

The money will be sent to your US bank account, and you can use Wise to manage the currency conversion at the mid-market rate.

Costs of selling property in India

Naturally, inheriting and selling a property in India will give you a financial boost, but it also comes with a few necessary costs. Some fees go to the Indian government, and others you'll pay to professionals who help you through the process.

Here's an estimate of what you can expect:

Cost	Amount
Stamp duty	4% to 10% of property value (varies by state)⁴
Registration charges	Typically 1% of property value⁴
Real estate agent commission	Varies
Legal fees	Varies
Property valuation fees	Varies
Power of attorney	Varies
TDS deduction	12.5% (LTCG) or 30% (STCG) on full sale amount³
Chartered Accountant fees	Varies

These costs add up quickly, so budget for them separately from your expected sale proceeds.

Tax implications when selling an inherited property in India

You don't pay tax on inheriting property in India, but you do pay tax when you sell it. How much you owe depends on how long the property was held and how much profit you make.

The holding period includes the time the previous owner held the property, plus your time as the owner.² In other words, if your parents bought the property 10 years ago, and you inherited it a year ago, your total holding period is 11 years.

Here's how the capital gains tax would apply:

Holding period	Type of gain	Tax rate³
More than 24 months	Long-term capital gains (LTCG)	12.5%
24 months or less	Short-term capital gains (STCG)	Taxed according to your income tax bracket

The capital gains tax is calculated as the "sale price minus (cost of acquisition + improvement costs + selling expenses) = capital gain."

For inherited property, you'll use the previous owner's original cost of acquisition. If the property was acquired before April 1, 2001, you can use the Fair Market Value as of that date instead, which usually reduces your tax burden.²

💡 There are a few different ways to eliminate or reduce your capital gains tax burden, but to do that, your money would have to stay in India. You won't be able to transfer it back to the US.

US tax implications when selling inherited property in India as an American

As a US citizen or resident, you must report your property sale to the IRS. However, you'll typically be able to avoid paying capital gains tax on it.

First, the US uses the "step-up in basis," which means that your cost basis is the property's Fair Market Value on the date you inherited it, not what the previous owner paid.

If the property was worth 200,000 USD when you inherited it and you sold it for 250,000 USD, your US taxable gain is only 50,000 USD.

Second, you can claim a tax credit for the Indian capital gains tax you paid to avoid paying tax twice on the same income. If your US tax obligations end up being higher than your Indian ones, you'll just need to pay the difference.

Keep in mind that you may also have to file FBAR and FATCA reports if your foreign accounts and assets exceed certain thresholds. These aren't taxes. They're just reporting requirements, but missing them will likely trigger fees.

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Selling inherited property in India from the US won't be a simple process, but it's definitely possible to achieve. The biggest hurdle is that you'll have to handle documentation across 2 countries and navigate tax systems in India and the US.

The process may take several months or even over a year, so don't expect the sale proceeds to hit your US bank account any time soon.¹

Also, remember that you can only repatriate up to 1 million USD per financial year, and if you inherited agricultural land, those proceeds must stay in India.²

Once your sale is complete and you're ready to move money from India to the US, banks will charge you transfer fees and exchange rate markups.

In other words, banks don't use the mid-market rate you see on Google when you check how much USD you'll get for your INR. They add a hidden markup, typically 3% to 5%, which can cost you thousands on a large property sale.

To reduce your transfer costs, it's important to investigate different alternatives, such as Wise.

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Sources

1. Rustomjee - Can a Foreign Citizen Inherit Property in India?
2. ICICI Bank - Navigating NRI inheritance laws in India for real estate
3. Taxes for Expats - Selling Indian Property as an NRI & US Taxpayer
4. Urban Money - Stamp Duty and Registration Charges

Sources checked 12/08/2025