The anxiety caused is due to the lack of knowledge and false information spread by halfwits. We will discuss the true motive of FATCA in this article.
The objective of FATCA is to track down the taxpayers in the US who evade tax levitation by avoiding their worldwide income. The law differs with respect to the nature of property as we know are Movable property and Immovable property. As an NRI, you can avail certain limited tax exemptions on the immovable property through DTAA (Double Tax Avoidance Act).
As an NRI residing in the US, the asset types that you need to report in Form 8938 of FATCA are mostly movable properties or financial products mentioned below.
If you own a real estate property in India then you need not report that in the Form 8938. It includes any personal residence or a rental property owned individually. But this is not the case if,
An immovable property held through a foreign entity such as a corporation, trust, or partnership comes into reporting foreign financial asset if the total value of your specified foreign financial asset is greater than the reporting threshold limit of IRS. (The reporting threshold limit is greater than $50,000 on the last year or greater than $75,000 at any time during the year)
FATCA does not have any direct effect on your real-estate property in India. But the FATCA will not completely replace the terms of DTAA. Article 6 of DTAA clearly mentions that,
The FATCA is established only to track down the tax evasion of income in the US thus income arising from internationally owned immovable property is not a subject to be concerned in the US. So, you don’t have to worry about your property in India until you are paying the tax for that property to the Indian Government.
Even though you pay tax in India for the immovable property, it is also a part of the US worldwide income and must also be declared when filing US taxes. However, DTAA gives credit for the tax you paid in India when filing income tax in the US. Just to make sure that you do not pay tax twice for the same income.
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