The rupee closed at ₹96.73 to the dollar on 9 October 2026, close to its record low of ₹96.96 set in May. The next day the RBI announced a special dollar window for three state-run oil companies and tighter rules on currency derivatives, according to Business Today. Moves like these lead many Indian families to ask whether they should buy rental property in the U.S. and hold an asset that earns rent in dollars.
The legal answer is short. A resident individual can buy property abroad with money sent under the Liberalised Remittance Scheme for U.S. real estate. The harder question is what the buyer takes on afterwards, because a U.S. rental home held in the buyer's own name makes an Indian resident a landlord, a U.S. taxpayer and, at death, a possible U.S. estate taxpayer. Those lasting obligations, more than the exchange rate, should decide whether the route suits a family, and the complete guide to investing in U.S. real estate from India sets out the other routes.
How Indians Can Buy Rental Property in the U.S. Under LRS
The Reserve Bank of India's FAQ on purchase of immovable property says a resident individual can send remittances under LRS to buy property outside India. The overall LRS limit is US$250,000 per person per financial year, which runs from 1 April to 31 March. Each remittance goes through the investor's authorised dealer bank, which reviews the documents and confirms the purpose before the money leaves.
Family members can combine their limits for one purchase, according to the same FAQ, provided each relative is resident in India and meets the scheme's conditions. In practice, each person must remit from their own account and own their share of the property. Combining limits also raises Indian tax questions, including the clubbing of income and the treatment of gifts between relatives, which a CA should review before any money moves.
Tax is also collected on the way out. Under section 394 of the Income-tax Act, 2025, the bank collects TCS at 20% on investment remittances above ₹10 lakh in a financial year. TCS is not an extra tax, since it can be claimed as a credit or refund in the investor's return, but it ties up cash until that return is processed.
How U.S. Rental Income Is Taxed for a Nonresident Owner
Once the property is let, the U.S. tax system treats the Indian owner as a nonresident alien. According to the IRS guidance on real property owned by nonresident aliens, income from U.S. real property is taxed at 30% if it is not effectively connected with a U.S. trade or business. At that rate, no deductions are allowed for property tax, insurance, repairs or loan interest.
Most owners therefore elect, under section 871(d) of the U.S. tax code, to treat all their U.S. real property income as effectively connected. The owner can then deduct expenses tied to the property. In return, the owner must file Form 1040-NR every year and give Form W-8ECI to the tenant or manager who would otherwise withhold tax. The election stays in force for later years unless it is revoked, and an owner who files more than 16 months late loses the right to claim deductions.
India taxes the same rent as well, because a resident is taxed on worldwide income. Article 6 of the India-U.S. tax treaty lets the U.S. tax income from property located there, and India gives credit for the U.S. tax paid, claimed on Form 44 under the Income-tax Rules, 2026, which took over this role from Form 67. How U.S. property income is taxed in both countries is covered in the U.S. tax guide.
The property must also be disclosed every year in Schedule FA of the Indian income tax return, whether or not it earned rent that year. What Schedule FA asks of property owners explains the reporting in detail.
What Happens When the Property Is Sold or the Owner Dies
A sale brings in a second U.S. rule. Under the Foreign Investment in Real Property Tax Act, known as FIRPTA, the buyer of U.S. property from a foreign seller generally withholds 15% of the amount realised, according to the IRS. The amount realised is broadly the sale price, not the profit, so the sum withheld can be far larger than the final tax owed.
The seller then files a U.S. return to work out the actual tax and claim back any excess. India also taxes the gain under its own capital gains rules, because the treaty leaves each country to tax capital gains under its domestic law. Families who plan to sell within a few years should cost this in before they buy.
Death raises a question many families do not expect. The IRS says the estate of a nonresident who is not a U.S. citizen must file Form 706-NA if U.S.-situated assets exceed US$60,000 at death, and U.S. real estate counts as such an asset. The India-U.S. treaty covers income tax only, so it offers no relief, and how U.S. estate tax applies to global investors is worth reading before the property is bought.
Running a Single U.S. Property From India
Indian buyers are already active in this market. In its report released on 29 July 2026, the National Association of Realtors said buyers from India made up 9% of foreign purchases of existing U.S. homes between April 2025 and March 2026, the fourth-largest group. It also found that 48% of foreign buyers paid all cash, compared with 28% of all existing-home buyers.
Those buyers take on work that does not stop after the purchase. A rental home needs a tenant, a lease, repairs, insurance, property tax payments and usually a local manager paid from the rent. An owner living in Mumbai or Bengaluru depends on that manager's reporting and must check it from a distance.
Financing adds another layer. Whether and how a resident can borrow against overseas property under FEMA is not simple. Any plan to use a loan should be settled with the authorised dealer bank and a FEMA adviser before signing.
Risks and Limits of Owning a U.S. Rental Home Directly
The risks are those of any property, concentrated in a single asset. Capital can be lost if the home falls in value or needs major repairs. Rent stops when a tenant leaves or fails to pay, while property tax, insurance and upkeep continue.
The home is illiquid, because a sale takes time and attracts FIRPTA withholding. Any loan adds leverage and refinancing risk. The rupee value of rent and sale proceeds also moves with the exchange rate, in either direction. Why currency movement cuts both ways for dollar assets is explained in the dollar assets guide.
Compliance is a risk in its own right. A late U.S. return can cost the owner the right to deduct expenses, and Indian disclosure is required every year the property is held. A manager, an LLC or an adviser can share this work, but none of them takes the risks away.
How Pooled Ownership Differs From a Rental Home
The alternative many families weigh is pooled ownership, where an investor holds an interest in an entity rather than a house. In the structure Raveum uses, Indian investors invest through a U.S. corporation, known as a blocker, that holds the property interest, and they typically receive Form 1042-S rather than filing their own U.S. return on rent. How a real estate SPV works for Indian investors explains the entity side of this.
Pooling changes the work, not the risk. The investor no longer deals with tenants or repairs. Instead, the investor depends on the sponsor, meaning the real estate firm that runs the deal, and has no control over when the property is sold. Interests are usually illiquid until the property exits, and distributions can be reduced or stopped if the property underperforms.
Owning the Property Is the Real Decision
The rupee near its record low explains why the question is being asked now, but it does not answer it. An Indian resident can legally buy rental property in the U.S., and many do. What they take on is a set of obligations in two tax systems that lasts as long as they own the home and, through estate tax, beyond it.
The useful test is whether a family wants to run a property or only to hold an economic interest in U.S. real estate. Families who want control and accept the paperwork may lean toward a direct purchase. Those who want exposure without being a landlord may look at pooled routes and accept sponsor dependence and illiquidity. Investing in U.S. real estate from India is compared route by route in the main India guide.
Whichever route a family weighs, the same checks apply to the structure, the tax filings in both countries, the estate exposure and the exit. Eligible investors can review how investing in U.S. real estate from India works on Raveum, including the property, sponsor, ownership structure, fees, risks and offering documents for each opportunity.
Frequently Asked Questions
Can I Buy a House in the U.S. From India?
Yes. RBI rules allow a resident individual to buy property outside India with money sent under the Liberalised Remittance Scheme, up to US$250,000 per person in a financial year. The authorised dealer bank reviews each remittance, TCS applies above ₹10 lakh, and the property must be reported in Schedule FA every year.
How Is U.S. Rental Income Taxed for a Nonresident?
Without an election, the IRS taxes a nonresident's U.S. rental income at 30% with no deductions for expenses. Most owners elect under section 871(d) to treat it as effectively connected, which allows deductions but requires Form 1040-NR every year. India also taxes the income and gives credit for U.S. tax paid.
Do I Need an LLC to Buy Rental Property in the U.S.?
No law requires one. Some buyers use a U.S. LLC to keep the property's liabilities apart from their other assets, but it adds formation, filing and banking paperwork. Its tax treatment in the U.S. and India depends on how it is set up, so a U.S. tax adviser and an Indian CA should review it first.
What Happens to U.S. Property If a Foreign Owner Dies?
The IRS requires the estate of a nonresident who is not a U.S. citizen to file Form 706-NA when U.S.-situated assets exceed US$60,000 at death, and U.S. real estate counts. The India-U.S. treaty covers income tax only, so it gives no estate tax relief. Families should plan for this before buying.
How Much Tax Is Withheld When a Nonresident Sells U.S. Property?
Under FIRPTA, the buyer generally withholds 15% of the amount realised, which is broadly the sale price rather than the gain. The seller then files a U.S. return to work out the actual tax and claim back any excess. India also taxes the gain under its own capital gains rules.
Is a Pooled U.S. Property Investment Easier to Exit Than a Rental Home?
Not necessarily. A rental home can be sold, though a sale takes time and attracts FIRPTA withholding. A pooled interest usually cannot be sold before the property exits, and the sponsor decides when that happens. Both routes are illiquid, can lose capital and suit only investors who can wait.
This article is for general education only and is not investment, tax or legal advice. Rules change and depend on individual circumstances. Investing in private real estate involves risk, including loss of capital, illiquidity, falling property values, distributions not being paid and currency movements. Participation is limited to non-U.S. persons under SEC Regulation S and verified U.S. accredited investors under Regulation D Rule 506(c), and offerings on Raveum are not open to the general public.
