Inherited Property in India? A Complete Guide for US Citizens & Green Card Holders

For thousands of US Citizens and Green Card holders of Indian origin, property inheritance in India is both a blessing and a challenge. While receiving a flat in Hyderabad, a villa in Bengaluru, or agricultural land from parents may sound simple, the legalities, taxation, FEMA rules, and repatriation of funds abroad make the process complex.

This article provides a step-by-step guide for NRIs, OCI card holders, and Green Card holders who inherit property in India — with a special focus on Hyderabad real estate.

Who is Considered an NRI, PIO, or OCI?

• NRI (Non-Resident Indian): An Indian citizen living abroad for more than 183 days in a year.

• PIO (Person of Indian Origin): Foreign citizen with Indian roots (excluding Pakistan, Bangladesh, China, etc.).

• OCI (Overseas Citizen of India): A lifelong visa status for foreign citizens of Indian origin.

• US Green Card Holder: Automatically treated as an NRI in India for property-related matters.

👉 If you are a US Citizen or Green Card holder, you are treated as an NRI under Indian law.

What Types of Property Can NRIs Inherit in India?

NRIs can inherit:

• ✅ Residential properties (apartments, villas, houses).

• ✅ Commercial properties (shops, offices, complexes).

• ✅ Agricultural land or farmhouses (only through inheritance, not purchase).

Key Rule: NRIs cannot buy agricultural land but can inherit it and later sell it to a resident Indian.

Taxation on Inherited Property in India

The good news: India does not levy inheritance tax.

However, taxation arises when you earn income or sell the inherited property:

1. Rental Income: Taxed in India under “Income from House Property.”

2. Sale of Inherited Property:

   • Capital gains tax applies (short-term if held <2 years, long-term if >2 years).

   • Long-term capital gains are taxed at 20% with indexation benefits.

Important: Capital gains are calculated on the original purchase price paid by your parents/grandparents, not on the inheritance date.

Double Taxation for US Citizens & Green Card Holders

Since US Citizens are taxed on global income, many fear being taxed twice.

✅ Relief comes through DTAA (Double Tax Avoidance Agreement) between India and the US.

• If you sell property in Hyderabad and pay capital gains tax in India, you can claim credit in the US.

• This prevents double taxation and reduces overall tax liability.

FEMA & RBI Rules for NRIs

Under FEMA (Foreign Exchange Management Act):

• NRIs can inherit any type of property in India.

• Sale proceeds must be deposited into an NRO account.

• You can repatriate (send abroad) up to USD 1 million per financial year, including inherited property sales.

• RBI approval may be required in some agricultural property cases.

Documentation Needed for Selling Inherited Property

1. Original purchase deed of the property.

2. Registered Will or succession certificate.

3. Death certificate of the original owner.

4. Proof of inheritance (legal heir certificate, probate if required).

5. NRO bank account details.

6. Form 15CB & 15CA for tax clearance when remitting money abroad.

Case Study – Our Client Iyer, NRI from the US Selling Inherited Property in Hyderabad

Mr. Iyer, a Green Card holder in New Jersey, inherited a 3BHK flat in Gachibowli, Hyderabad. He wanted to sell it and transfer the funds to the US.

With Kaptain Group’s support:

• Legal heir certificate and tax documents were prepared.

• Buyer deducted TDS at 20%.

• Capital gains were declared and Form 15CB issued by a CA.

• Funds were deposited in his NRO account and repatriated to his US bank.

Result: A compliant, tax-efficient transaction without Mr. Iyer needing to travel to India.

FAQs – Inherited Property for US Citizens & Green Card Holders

1. Is inheritance taxable in India?No, inheritance itself is not taxed. Only income or sale proceeds are taxed.

2. Can US Citizens inherit agricultural land in India?Yes, but they cannot buy new agricultural land. They can sell inherited agricultural land only to a resident Indian.

3. Do I need to report inherited property in my US tax return?Yes. Under FATCA, you must report foreign assets via Form 8938 and, if applicable, Form 3520.

4. How much money can I repatriate from India after selling inherited property?Up to USD 1 million per financial year from your NRO account.

5. Can Power of Attorney (PoA) help in managing inheritance?Yes. You can authorize a trusted relative via PoA to sell or manage your property.

Why Choose Kaptain Group?

• ✅ Experts in Hyderabad NRI property laws.

• ✅ Assistance with inheritance, succession, and taxation.

• ✅ End-to-end support for property sale, TDS, FEMA, and repatriation.

• ✅ Regular updates and transparent process.

Final Thoughts

Inheriting property in India as a US Citizen or Green Card holder is common, but navigating tax laws, FEMA rules, and fund transfers can be stressful.

With Kaptain Group, you get a trusted partner in Hyderabad who ensures your property is protected, sold at maximum value, and funds safely reach your overseas account.

👉 Contact Kaptain Group today to make inheritance stress-free and compliant.