US citizens are taxed on their worldwide income. So if you sold this property for a gain you must report it as a capital transaction on Schedule C. However, if it was depreciated and used as an investment, first you would need to report this on Form 4797. This would break the gain up between ordinary income recapture and capital gain. If you paid any income taxes in India on this transaction you can claim an income tax credit to offet the taxes due as a result of this sale.
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U.S. Citizens are taxed on their worldwide income. That means if you had a capital gain in India you would have to pay U.S. Capital gains tax on the income. You would also get a credit for any tax that you may have paid in India.
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Sadly, you must pay. U.S. citizens are subject to tax on worldwide income. The U.S. does provide a foreign tax credit to reduce US tax for taxes paid in India. You should pay the taxes due with your estimated taxes to avoid penalty. You also do not mention if you collected rental income on the property prior to the sale.. Check with an attorney for advice in this area.Hope this helps.
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