am a NRI and bought a property in India by availing a home loan from India. I pay regular mortgage payments to this loan. I have rented this property now and I get rental income.
Given that I am a NRI, what are my options ?
1. Should I file a tax return in India for my rental income ? Can I deduct the mortgage interest in my tax return ?
2. Can I file the tax returns in USA instead ?
What are the benefits of both approaches ?
Rental Income and Mortgage Interest Deduction?
Considering you have no answers, I'm assuming that everyone else who read it is as clueless as me as to what an NRI means.
Consult a tax professional.
Rental Income and Mortgage Interest Deduction?
You will have to report this rental income in both India and USA.
The tax filing in India needs to include only income earned in India, which includes house rental income. The following deductions are allowed:
- property tax paid on the property
- 30% of rental income for maintenance, etc.
- interest on mortgage payments
- Rs 1 lakh standard deduction.
If after deducting all of this, you still have a net income, you need to file taxes in India. Otherwise, you can skip it.
In the USA, you need to report your %26quot;worldwide income%26quot;. This includes rental income in India. The following deductions can be applied against this rental income:
- property taxes, management fees, maintenance expenses
- interest on mortgage
- depreciation on house based on IRS rules
You can get a credit for any taxes paid in India on your USA tax return.
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