Transfer money from a real estate sale in India to the US
How would I go about doing this? Assuming you had purchased the house by funding from your NRE account, you can easily move back the 30K into NRE Account and out of India from NRI Account. The 30K profit would be taxed in India as per capital gains and can only be moved into NRO account. A CA would need to certify that appropriate taxes have been withheld before the bank will release the funds for repatriation out of India. There is also a limit [large 1 million USD] on how much funds can be moved out of India. Consult a CA who would help you with the formalities. If you have not funded the purchase from NRE account, the entire proceeds should be into NRO account and then move funds from there. How would I go about doing this? Are there any tax laws I should be worried about? Just report it as a regular sale of asset on your form 8949 (or form 4797 if used for trade/business/rental). It will flow to your Schedule D for capital gains tax. Use form 1116 to calculate the foreign tax credit for the taxes on the gains you'd pay in India (if any). If you are using the money to invest in a property (even abroad) then you can claim tax exemption. while some people will tell you that the reinvestment should be in India only, it have been ruled that the property can be purchased abroad too..
"Transferring the money or keeping it in US does has no effect on taxes. Your residency status has. Assuming you are Resident Alien in US for tax purpose and have paid the taxes to IRS and you are ""Non-Resident"" Indian for tax purposes in India as you are more than 182 outside India. How would it effect my Tax in US and India If you are ""Non-Resident"" in India for tax purposes, there is no tax liability of this in India. I have transferred an amount of approx 15-20k$ to Indian Account (not NRE) By RBI regulation, if you are ""Non-Resident"" then you should get your savings account converted to ""NRO"". You may not may not choose to open an NRE account. To keep the paper work clear it helps that you open an NRE account in India. Any investment needed ? Where do i need to declare if any ? These are not relevant.  Note any income generated in India, i.e. interest in Savings account / FDs / Rent etc; taxes need to be paid in India and declared in US and taxes paid in US as well. There is some relief under DTAA. There are quite a few question on this site that will help you clarify what needs to be done." There is no tax liability for your brother in India as under gift tax,t there is no cap on amount. The transaction may be taxable to you in US, as there is a limit of USD 14000 per year per person. Online money transfer facility from Axis Remit is a quick and easy way to transfer money from USA to India. AxisRemit is Axis Bank's flagship inward remittance service enables you to transfer money to your beneficiaries through the most efficient channels like online money transfer, exchange houses and money transfer operators. There are quite a few details missing. What was your status in India when the property was purchased. How was the property funded? As your status now is PIO, assuming you have registered as PIO, and the purchase was funded from NRE account; You can credit the original purchase price into NRE account and repatriate. The capital appreciation has to be credited to NRO, tax paid and apply for repatriation. A certificate from qualified chartered accountant is required. Essentially it certifies you have paid tax and are compiling with FEMA (Foreign exchange management act) If you are not registered as PIO, you would need to apply to RBI (Reserve Bank of India, similar to fed) for permission to sell as this transaction falls under FEMA. You would in any case need a CA. A lawyer would also help. Assuming you were reporting this property in your US IRS returns ... You are liable for taxes in US.  India and US have some amount of DTAA( dual tax avoidance agreement) Buyer A didn't send money to the US government, Buyer A sent money to Seller B, a US resident.  I think the most common way to facilitate a transaction like this is a regular old international wire transfer. Buyer A in India goes to their bank to exchange X INR to $1mm USD.  $1mm USD is then wire transferred to Seller B's bank account.  The USD was sold to Buyer A, either by funds held by Buyer A's bank, or foreign exchange markets, or possibly the US government.     Seller B may owe taxes on the gain derived from the sale of this thing to Buyer A, but that taxation would arise regardless of who the buyer was.  Buyer A may owe an import tax in India upon importing whatever they bought.  I don't think it's common to tax imported money in this sort of transactional setting though. Yes. You may be subjected to the US gift tax (if you transfer to anyone other than your legally married spouse or yourself). The receivers will have to deal with the Indian tax laws, which I'm not familiar with. Are there any IRS regulations I should be aware of when sending money to India? None. As long as you are following the standard banking channels. You are also declaring all the accounts held outside US in your tax returns. FBAR. Is it legal to do so?  Yes it is legal. do I have to declare how much I am investing and pay extra taxes? As part of FBAR. Income earned [including interest, capital gains, etc] needs to be paid in India [there are some exemptions for example interest on NRE accounts] as well as in the US [relief can be claimed under DTAA Indian version here and US here]. So if you already have paid taxes on salary and say transfer USD 10K to India; there is no tax on this 10K. If this 10K generates an income of say 2K; this 2K is taxable as per normal classification and rules. As I understand it, capital gains from real estate sales in India can be shielded from income tax entirely if the proceeds of the sale are invested in certain specific types of bonds (Rural Highway Contruction Authority of India?) for a period of three years beginning no later than x months (6 months?) after completion of the sale. Perhaps this applies to sales of inherited real estate only and not to commercial property or residential property acquired by purchase since there is no step-up of basis on death as occurs in the US, and in all likelihood, records of the purchase price of the inherited property are lost in the mists of time, and so the basis of the investment is effectively zero (or treated as such by the revenue authorities) The interest paid by these bonds is included in taxable income. Perhaps @Dheer will be willing to correct any mistakes in the above. So, it may be necessary to check whether (a) the interest income from the bonds was declared on Form 1040 Schedule B for each year (b) whether the appropriate boxes (the ones that ask whether the taxpayer has signature authority over foreign accounts etc) were checked on Schedule B or not, (c) whether Form TD 90-22.1 was filed each year or not (this is the FBAR requirement) Note that if the total value of the accounts is less than US $10K during the entire year, then the taxpayer is supposed to check NO on Schedule B and need not file Form TD 90-22.1.  Also, there is a separate requirement to file a Form 8938 for certain specific types of investments.  There was a two-part article describing these rules in Forbes magazine some time ago, and this is available on-line (Part 1 and  Part II) As @superjessi says, the IRS might be lenient if the only issue is not filing the forms in timely fashion, and the taxpayer is voluntarily coming into compliance even though the filing is late. They are likely to be less  forgiving if the foreign income was not reported, and still remains unreported even after filing the various forms. You friend would only be able to deposit this in NRO account. You may have to explain the source of money. If you declare it as gift, then you would need to pay gift tax.  What you are doing is converting USD to INR outside the normal banking network and this maybe in volition of FEMA [Foreign Exchange Management Act]. I can't find anything specifically about holding international real estate as a US taxpayer, but the act of transferring the money to (I presume) an account of yours in Italy, and any other associated accounts, will trigger requirements for reporting under FBAR and FACTA. Even with this, it is primarily a reporting requirement. I do not believe you will incur any additional taxes unless you do rent out the property (or allow someone not a reported dependent to make use of the property). Note that if you do not report and should, the penalties are quite steep, so please do comply. NOTE: I am not a tax expert, nor a lawyer, nor an accountant, nor an agent of the IRS. Please consult one or all of these before making any decisions. On my recent visit to the bank, I was told that money coming into the NRE account can only be foreign currency and for NRO accounts, the money can come in local currency but has to be a valid source of income (e.g. rent or investments in India). Yes this is correct as per FMEA regulation in India. Now if we use 3rd party remittances like Remitly or Transferwise etc, they usually covert the foreign currency into local currency like INR and then deposit it. The remittance services are better suited for transferring funds to Normal Savings accounts of your loved ones. Most remittance services would transfer funds using a domestic clearing network [NEFT] and hence the trace that funds originated outside of India is lost. There could be some generic remittance that may have direct tie-up with some banks to do direct transfers. How can we achieve this in either NRE/NRO accounts? If not, what are the other options ? You can do a Wire Transfer [SWIFT] from US to Indian NRE account. You can also use the remittance services [if available] from Banks where you hold NRE Account. For example RemittoIndia from HDFC for an NRE account in HDFC, or Money2India from ICICI for an NRE account in ICICI or QuickRemit from SBI etc. These would preserve the history that funds originated from outside India. Similarly you can also deposit a Foreign Currency Check into Indian Bank Account. The funds would take around month or so to get credited. All other funds can be deposited in NRO account. I would talk to an immigration lawyer.  This sounds like the kind of thing that they'd deal with frequently.  As I understand it, your concern is mostly about managing the transfer, not the sale.  An immigration lawyer is going to see clients with overseas assets frequently.  If this isn't something that they do themselves, they can refer you appropriately.   In general when I'm looking for a lawyer, I start with the local bar association.  The one for San Francisco.  If that's the wrong bay area, they are normally at the county level.  So you can find them by searching for bar association with the appropriate county or city name.  If you explain your problem briefly, they can direct you. Assuming that your friend is residing in India, any money that he returns to you cannot be deposited into your NRE (NonResident External) account; it must go into your NRO (NonResident Ordinary) account. You don't have an NRO account, only ordinary savings accounts in India that you established before leaving the country and becoming an NRI (NonResident Indian) ? Well, you are in violation of FEMA regulations and need to convert all those ordinary savings accounts into NRO accounts as soon as possible. Your bank will help you in doing this (by letting you hold ordinary accounts while you have NRI status, the bank too is in violation of FEMA regulations). With regard to taxation, unless you have created a paper trail by documenting the money sent to the builder as a loan to your friend, the entire amount (less INR 50,000 exemption) that your friend will return to you will be considered a gift from your friend to you, and it will be taxable income to you in India, and possibly taxable income to you in your country of residence, though there may be tax treaties that will let you pay taxes in one country only. If you do have a paper trail, then only the excess of what your friend returns to you is interest income to you; the bulk is just repayment of the loan principal, and is nontaxable. If you are residing in the US, I do hope that you have reported the fact that you had foreign bank account(s) totaling more than US$10K in value to the IRS and the US Treasury as per FBAR regulations; because if not, you have many more tax issues to worry about. The fines for not filing these reports are onerous. "Most personal loans in the US are for the purpose of purchasing some tangible object (usually a house or car) and that object is the collateral for the loan. Indeed, the loan proceeds are usually paid directly to the seller without passing through the bank account of the borrower, and the seller delivers the title of the car to the lender, or a mortgage lien is recorded on the real property. Except possibly in the case of a refinance of a home mortgage,  there is not much cash from such a loan to send to a friend to invest in his business, whether in the US or in India.  These types of loans are ""relatively easy"" to get. Much harder to get are unsecured personal loans. Unless your friend has a very friendly banker, getting an unsecured loan of, say, $20,000 ""just for the heck of it"" is not easy. Some reasonably well-off people do manage to get such loans and use the money to invest in the stock or bond markets, in which case, the interest paid on such loans can be deducted on  Schedule A (but only to the extent of the actual investment income; any extras can be carried over to the next year). So, will your friend be investing in your business or making a loan to your business? and do you anticipate that your business will generate any investment income or interest for your friend? If not, and your friend still wants to finance your business (while making payments on the loan in the US), then your friend must really like you a lot (or have faith that a few years down the road, you will be able to sell your business to GoAppTel for mucho big bucks and pay him off very handsomely)." Shareholders have voting rights, and directors have fiduciary obligations to shareholders. Sure, shareholders have rights to the dividends, but stock confers decisionmaking powers. I'm not really sure what your answer to this is, or how you are differentiating the concept of ownership from this.