Does Indian Property Need to Be Reported Under FATCA to the IRS?

No. Directly held Indian property generally doesn’t have to be reported under FATCA on Form 8938. However, if the property is owned through a foreign entity, or it generates rental income, capital gains, or funds held in an Indian bank account, those items may create separate U.S. tax or reporting obligations. 

If you’re a U.S. person who owns property in India, you may be wondering whether your Indian property needs to be reported under FATCA to the IRS. In most cases, directly owned Indian property doesn’t have to be reported on Form 8938. However, if the property is owned through a foreign entity, generates rental income or capital gains, or the proceeds are held in an Indian bank account, separate U.S. tax or reporting obligations may still apply. 

This guide explains exactly when Indian property is reportable to the IRS, when it isn’t, and the reporting rules you need to know. While FATCA doesn’t create a new tax on your Indian property, failing to meet your reporting obligations can result in significant penalties.

What FATCA Actually Requires (and Why It Reaches India)

FATCA requires many U.S. taxpayers to disclose certain foreign financial assets to the Internal Revenue Service (IRS). For individuals, this reporting is done through Form 8938, which is filed with an annual Form 1040 tax return. However, not every overseas asset is reportable. Form 8938 applies only to specified foreign financial assets, such as foreign bank accounts, certain investment accounts, foreign securities, and interests in some foreign entities.

Although FATCA is a U.S. law, it also applies to financial assets held in India. That’s because India and the United States signed a Model 1 Intergovernmental Agreement (IGA) in 2015, allowing Indian financial institutions to identify reportable U.S. account holders and share that information with Indian tax authorities, who then exchange it with the IRS.

The distinction between foreign financial assets and physical real estate determines how FATCA applies. Let’s look at when Indian property is and isn’t reportable on Form 8938. 

The Direct Answer: Is Your Indian Property Reportable on Form 8938?

For most NRIs and other U.S. taxpayers, the answer is no. The reporting rules depend on how you own the property. Direct ownership is generally not reportable on Form 8938, while ownership through certain foreign entities may be. 

Property Held Directly in Your Name — Not Reported

The IRS states that foreign real estate held directly isn’t a specified foreign financial asset required to be reported on Form 8938. This applies whether you purchased a residential property in Mumbai, inherited a house in Delhi, or own a plot of land in Bengaluru. 

Property Held Through a Company, LLP, HUF, or Trust — Reported

The reporting rules are different when your Indian property is owned through a foreign entity instead of directly in your own name. In that case, the IRS looks at your ownership interest in the entity, not the property itself.

For example, if your property is held through an HUF, company, LLP, or certain trust, the property itself isn’t the asset considered for Form 8938. Instead, the IRS determines whether your ownership interest in that entity is a specified foreign financial asset. If your ownership interest is a specified foreign financial asset and you meet the Form 8938 filing threshold, you must report that ownership interest on Form 8938.

Whether Form 8938 applies depends on how you own the property, not the property itself.

Do You Even Cross the Form 8938 Threshold?

Not everyone who owns a foreign financial asset has to file Form 8938. Whether you need to file depends on the total value of your reportable foreign financial assets, your filing status, and whether you live in the United States or abroad. The IRS limits are shown below. 

For the 2025 tax year (filed in 2026), the filing thresholds remain as follows:

Note: The higher thresholds apply only to taxpayers who satisfy the IRS requirements for living abroad for Form 8938 purposes. They don’t apply simply because you own property or other assets outside the United States.

Many NRIs assume they qualify for the higher Form 8938 filing thresholds simply because they own property or other assets in India. That’s incorrect. If your tax home is in the United States, you use the U.S. filing thresholds. You can use the higher filing thresholds only if your tax home is in a foreign country and you meet the IRS’s bona fide residence test or physical presence test. 

Once you’ve determined whether you need to file Form 8938, the next step is understanding which property-related items must still be reported to the IRS, even when the property itself doesn’t appear on the form.

What You DO Have to Report (Even When the Property Is Exempt)

Even though the property itself is often exempt from Form 8938, that doesn’t necessarily end your U.S. reporting obligations. Many taxpayers assume that because directly held Indian property usually isn’t reported on Form 8938, there’s nothing else to report. That’s a common misconception. Even when the property itself is exempt from Form 8938 reporting, three separate U.S. reporting obligations may still apply: the rental income it generates, any gain when you sell it, and the Indian bank account where the money is held.

Rental Income on Schedule E (and the FTC for Indian TDS)

If you earn rental income from your property in India, you generally must report it on your U.S. tax return, even if the rent has already been taxed in India. Because the United States taxes worldwide income, Indian rental income is generally reported on Schedule E of your U.S. tax return. The income should be converted into U.S. dollars using the applicable exchange rate. U.S. and Indian tax rules don’t allow the same deductions. For example, the IRS generally allows depreciation on residential rental property instead of India’s standard 30% deduction. For example, the IRS generally allows depreciation on residential rental property but doesn’t provide the same standard 30% deduction available under Indian tax law. If tax is deducted in India, such as TDS (Tax Deducted at Source), you may be able to claim a Foreign Tax Credit on Form 1116 if the Indian tax qualifies under U.S. tax rules. 

Capital Gains When You Sell (No Indian Indexation, Section 121 May Apply)

Selling property in India can also create a U.S. tax reporting obligation. For U.S. tax purposes, capital gain is generally calculated by comparing the property’s purchase price and sale price after converting both amounts into U.S. dollars. The IRS doesn’t recognize India’s indexation benefit when calculating capital gains. If the property qualifies as your principal residence under the IRS rules, you may be eligible to exclude up to $250,000 of capital gain from U.S. tax ($500,000 for certain married couples filing jointly). To qualify, you must have owned and used the property as your principal residence for at least two of the five years before the sale. If you’ve already paid tax in India, you may also be able to claim a Foreign Tax Credit if the Indian tax qualifies under U.S. tax rules.

The Indian Bank Account Holding Your Rent or Sale Proceeds (FBAR + Maybe Form 8938)

The property itself may not be reportable under FATCA, but the Indian bank account holding your rental income or sale proceeds can create separate reporting obligations.

For example, if your rent or sale proceeds are deposited into an Indian bank account, such as an NRO or NRE account, the account is reportable on the FBAR (FinCEN Form 114) if the aggregate value of your foreign financial accounts exceeds $10,000 at any time during the calendar year. The account also counts toward your Form 8938 filing threshold. If the total value of your reportable foreign financial assets exceeds the applicable IRS filing threshold, you must report the account on Form 8938. 

In short, while directly owned Indian property is generally exempt from Form 8938 reporting, the income it generates and the bank account connected to it can still create separate U.S. reporting obligations.

FATCA vs. FBAR for Indian Property Owners

Even if your Indian property isn’t reported on Form 8938, the Indian bank account connected to that property may still have to be reported under the FBAR, Form 8938, or both. Understanding the difference between these two reporting requirements helps you determine which forms apply to you.

Many taxpayers confuse FATCA (Form 8938) and the FBAR (FinCEN Form 114) because both involve reporting foreign assets. The easiest way to remember the difference is this: FBAR tells the government where your money is, while Form 8938 tells the IRS what your foreign financial assets are.

The FBAR (FinCEN Form 114) is filed separately from your federal income tax return and applies only to foreign financial accounts.

Form 8938, required under FATCA, is filed with your Form 1040 and covers a broader range of specified foreign financial assets, including certain foreign bank accounts, investment accounts, and ownership interests in foreign entities.

The key point is that directly owned Indian property isn’t reported on either form. However, the Indian bank account holding your rental income or sale proceeds must be reported on the FBAR if your foreign financial accounts exceed the FBAR filing threshold. It must also be reported on Form 8938 if you exceed the applicable Form 8938 filing threshold. 

What Happens If You Don’t Report

A missed Form 8938 may result in an initial $10,000 penalty. If you continue not to file after receiving an IRS notice, additional penalties of $10,000 for each 30-day period may apply, up to an additional $50,000, for a potential maximum penalty of $60,000.  If the failure results in an underpayment of tax related to undisclosed foreign financial assets, the IRS may also impose a 40% accuracy-related penalty.

Reporting failures can also give the IRS more time to review your tax return and assess additional tax. In most cases, the IRS has three years from the date you file your tax return to do this. However, if you omit more than $5,000 of income related to specified foreign financial assets, the IRS has up to six years to assess additional tax. If you’re required to file Form 8938 and don’t, the IRS can also keep this period open until you provide the required information.

If you didn’t file Form 8938 because your failure was non-willful, you may be eligible for the IRS Streamlined Filing Compliance Procedures. Under this program, eligible taxpayers can correct past reporting failures by filing amended or delinquent tax returns, the required information returns (including Form 8938, if applicable), and any overdue FBARs. To qualify, you must certify that your failure to report was non-willful, meaning it resulted from negligence, an inadvertent error, a mistake, or a good-faith misunderstanding of the law, not an intentional attempt to avoid your U.S. tax or reporting obligations. 

Conclusion

The answer is straightforward: if you own property in India directly in your own name, you generally don’t report it on Form 8938. However, you may still have to report rental income, capital gains when you sell the property, ownership interests in certain foreign entities that hold the property, and Indian bank accounts connected to the property if you meet the applicable reporting requirements. 

Because cross-border tax reporting depends on whether you own the property directly or through an entity, and whether you rent it out or sell it, Because cross-border tax reporting depends on how you own the property and how you use it, professional advice can help ensure your U.S. filing requirements are met correctly. If you’ve missed prior-year filings, you may also be eligible to use the IRS Streamlined Filing Compliance Procedures if your non-compliance was non-willful.

FAQ