Blog · How-to guide
How to invest in US property from India without getting burned
Indians bought US$3.7 billion of American homes last year. Here is how to do it properly, from LRS to LLCs and the tax that surprises everyone.
America is the world's deepest property market, and Indians are among its keenest foreign buyers. In the year to March 2026, buyers from India purchased about 6,000 US homes worth US$3.7 billion, fourth among all countries, according to the National Association of Realtors.
Who buys America's homes?
Foreign buyers of US homes by country, US$ billion, Apr 2025–Mar 2026
Figure 1. Source: National Association of Realtors
Many of those buyers are families with children studying or working in the US. Some are investors chasing rent in dollars. Either way, buying from India comes with rules on both sides of the ocean.
Step one: getting the money there
The Indian side works exactly as it does for Europe. You remit under the Liberalised Remittance Scheme: up to US$250,000 per person per financial year, with property abroad a permitted use. Remittances above ₹10 lakh in a year for investment attract 20% tax collected at source, adjustable against your income tax. At around ₹97 to the dollar in October 2026, a US$400,000 home costs nearly ₹3.9 crore before costs, so most families pool limits across members and financial years.
Step two: decide how you will own it
You can buy in your own name, but many foreign investors use a US limited liability company (LLC), sometimes held through further structures, for three reasons: it separates liability if a tenant sues, it simplifies management, and with careful planning it can reduce US estate-tax exposure. The structure must also make sense under Indian rules on overseas investment, so this is a conversation for an Indian CA and a US tax adviser together, before you sign anything.
Step three: understand the tax that surprises everyone
The numbers to know
Figure 2. Source: Freddie Mac via Trading Economics; NAR; IRS rules
Estate tax. A US citizen can pass on millions free of federal estate tax. A non-resident foreigner who owns US property directly gets an exemption of just US$60,000. Above that, estate tax can take up to 40% of the value. This is the single biggest reason foreign buyers use structures and insurance, and the single biggest mistake families make when they buy in their own names.
FIRPTA on the way out. When a foreign person sells US property, the buyer must normally withhold 15% of the gross sale price and send it to the IRS. Your real tax may be much lower, and you can claim the difference back by filing, or apply for a reduced-withholding certificate in advance. But plan for that cash to be held up.
Rental income. Rent from a US property is taxable in the US. You can usually elect to be taxed on net income (after expenses and depreciation) rather than having 30% withheld from gross rent. It's also taxable in India, with credit for US tax under the India–US tax treaty.
Step four: financing, if you need it
Resident Indians face strict limits on borrowing abroad, and Indian banks don't fund foreign property. A few US lenders offer loans to foreign nationals, often "DSCR" loans that lend against the property's rental income, but expect higher rates and bigger deposits. With the US 30-year mortgage rate at 7.32% in late October 2026, about a percentage point higher than a year earlier, leverage is expensive anyway. Most Indian buyers pay cash.
Step five: pick the market, not the country
"The US" is fifty markets. Foreign buyers cluster in Florida (20%), California (19%) and Texas (12%), according to NAR. Florida and Texas offer no state income tax and cheaper homes, but higher insurance and property-tax bills. California offers deep demand and high prices, with lower rental yields. University towns are popular with Indian parents: buy where your child studies, let them live there, rent it out afterwards.
In America, the purchase price is the easy number. Insurance, property tax and estate planning are the ones that decide your return.
Running costs that catch first-timers
- Property tax of roughly 1–2.5% of value a year in many states, every year.
- Insurance, which has risen sharply in hurricane and wildfire zones.
- Homeowners' association fees in condos and planned communities.
- Property management, typically 8–10% of rent.
- Two tax returns, one in each country, every year.
Reporting in India
Disclose the property, any LLC and any US bank account in Schedule FA of your Indian return every year. The penalties for non-disclosure under the Black Money Act are steep enough to make a good investment a bad one.
A worked example: a US$350,000 condo near a university
Consider a Pune family whose daughter starts a master's degree in Texas. They buy a US$350,000 two-bedroom condo near campus: she lives in one room, and a classmate rents the other.
- Cost in rupees: at about ₹97 per dollar, roughly ₹3.4 crore, plus about 2–4% in closing costs.
- Remittance: both parents use their US$250,000 LRS limits, and TCS of 20% applies above ₹10 lakh each, adjusted later against their income tax.
- Running costs: Texas has no state income tax, but property tax can run around 2% of value, about US$7,000 a year, plus homeowners' association fees and insurance.
- Income: renting the second room at US$900 a month covers most of the running costs. After graduation, renting the whole unit at, say, US$2,100 a month gives a gross yield of about 7%, closer to 4–5% net.
Compared with paying US$1,500 a month in student rent for two years, the family keeps a dollar asset. But they must plan for estate tax and FIRPTA from day one.
A note on the EB-5 visa
Some readers ask whether buying US property leads to a green card. Buying a home does not. The EB-5 investor programme is separate: it requires investing at least US$800,000 in a qualifying project in a targeted area (or more elsewhere) that creates US jobs. It is a business investment with its own risks and processing times, not a house purchase.
Choosing between buying personally and via an LLC
- Personal name: simplest and cheapest, but exposes your estate to US estate tax above US$60,000 and gives no liability shield.
- Single US LLC: adds liability protection and easier management. On its own, it doesn't solve the estate-tax problem for a foreign owner.
- Foreign holding structures and insurance: commonly used to manage estate-tax risk, but they must work with India's overseas investment rules and tax rules. This is specialist territory.
The due-diligence checklist
- Title insurance: standard in the US, and worth paying for.
- Home inspection: always, even for new builds.
- Property-tax history and any pending reassessment.
- Insurance quotes before you sign, especially in Florida, coastal Texas and fire-prone California.
- HOA rules: some condo associations restrict rentals.
- Flood zone status.
Where Indian buyers are looking
Indian families tend to cluster where Indian communities, universities and jobs are: the Dallas–Fort Worth and Houston areas in Texas, the San Francisco Bay Area, New Jersey near New York, Atlanta, Seattle and Chicago. Texas and Georgia combine relatively affordable prices with large Indian communities; the Bay Area offers proximity to tech jobs at very high prices and low yields; New Jersey offers access to New York with high property taxes.
What the US market looks like right now
US mortgage rates rose through 2026 to about 7.3%, roughly a percentage point higher than a year earlier, which has kept many existing owners from selling homes bought with cheaper loans. That locks up inventory and keeps prices relatively firm even as sales slow. NAR's chief economist forecast in mid-2026 that the median home price would rise about 4% for the year. On BIS data, US house prices rose about 1.2% in nominal terms in the latest quarter but fell about 2.6% after inflation. For a cash buyer from India, that combination means more negotiating power than in the frenzied years of 2021–22, but don't expect bargains in high-demand areas.
The exit plan
When you sell, the buyer withholds 15% under FIRPTA unless you've arranged a reduced-withholding certificate. You file a US tax return to calculate the actual tax and claim any excess back, then pay Indian capital gains tax on the same gain with credit for US tax under the treaty. Bring the proceeds home through normal banking channels and keep the paperwork.
Questions readers ask us
Can I open a US bank account from India? It's possible with some banks and through your LLC, but often easier when visiting the US.
Do I need a US tax number? Yes: an ITIN for you personally, or an EIN for an LLC, to file returns and receive rent.
Will the rupee keep falling? No one knows. It has weakened through 2026, which has made dollar assets look good in rupee terms. Don't buy US property only as a currency bet.
Is now a good time? With mortgage rates above 7%, many US owners aren't selling, which keeps inventory tight. Cash buyers, which most Indian buyers are, have more negotiating power when buyers relying on mortgages step back.
The Honour Estates view
US property can be a sensible dollar asset for Indian families, especially those with children there. But never buy in your own name without an estate-tax plan, expect FIRPTA withholding when you sell, and run the numbers after insurance and property tax, not before.
General information, not legal or tax advice. Speak to an Indian chartered accountant and a US tax adviser before buying.
Sources
- NAR, foreign buyers purchased US$45.3bn of US homes, Apr 2025–Mar 2026
- Trading Economics, US 30-year mortgage rate news (22 Oct 2026)
- Atlanta Agent Magazine on NAR's 2026 forecast
- Tickertape, 'TCS on foreign remittance' (Aug 2026)
- FIRPTA withholding guide (2026)
Figures are the latest published at the time of writing (31 October 2026). Quotes are short excerpts with attribution. This article is general information, not financial, legal, tax or immigration advice.
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