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Sending Money from India to the USA to Buy Property: The LRS $250,000 Limit

The LRS (Liberalized Remittance Scheme) is the RBI framework that governs how Indian residents send money abroad. It allows up to $250,000 per person per financial year (April 1 to March 31) for authorized purposes including overseas property purchase. For an India-based buyer purchasing a $500,000 US property, two spouses can combine their LRS allowances in one year. For larger purchases, a combination of LRS transfers across financial years and NRE/FCNR account funds provides the path. The 20% TCS — though refundable — creates a cash flow consideration that every Indian buyer should plan for.

What the LRS Is and How It Works

The Reserve Bank of India’s Liberalized Remittance Scheme: (1) Who it applies to: Indian residents — people who are tax residents of India. NRIs who hold funds abroad (in NRE or FCNR accounts) are not subject to LRS for those funds. (2) The annual limit: $250,000 USD per person per financial year (April 1 to March 31). This limit covers all LRS remittances combined — education, travel, investment, and property purchase. (3) Authorized purposes: purchase of immovable property abroad is an authorized LRS purpose. (4) The process: you apply through an authorized dealer bank in India (any scheduled commercial bank). Provide Form A2 (remittance application), PAN card, declaration of the purpose, and supporting documents (US purchase agreement, escrow instructions). (5) The bank’s role: the bank verifies LRS compliance and initiates the international wire. The bank also collects TCS at the time of transfer.

The 20% TCS: What It Is and How to Handle It

TCS (Tax Collected at Source) applies to LRS remittances: (1) The rate: 20% TCS on LRS remittances above approximately INR 7 lakh (roughly $8,500 USD) for non-education, non-medical purposes. (2) How it works in practice: if you remit $100,000 USD under LRS for a US property purchase, your bank collects approximately 20% = $20,000 USD worth of TCS from you before initiating the transfer. You receive $100,000 USD in the US escrow. The $20,000 TCS is deposited by your bank with the Indian government against your PAN. (3) The refund: the TCS is credited to your Form 26AS (annual tax credit statement). When you file your Indian ITR for the year, the TCS credit is applied against your total tax liability or refunded if your liability is less than the TCS paid. (4) The cash flow impact: you need to remit 25% more than the actual amount needed (the property amount + 20% TCS) and wait for the annual refund. This is a significant cash flow consideration for large transfers. Plan the LRS transfer well in advance of the closing date.

Funding Larger Purchases: Above $250K

For purchases above $250,000 where a single person needs to transfer more than the annual LRS limit: (1) Two-spouse LRS: if two spouses are Indian residents, each can remit $250,000/year = $500,000 combined. (2) Multi-year transfers: transfers across two financial years (e.g., $250,000 in March and $250,000 in April) use two years of LRS in rapid succession. (3) NRE/FCNR account funds: funds already held in NRE or FCNR accounts are not LRS-limited. NRIs can wire freely from NRE accounts to US escrow. (4) Foreign currency account in a third country: some Indian professionals hold USD accounts in Singapore, UAE, or the UK. These are not LRS-limited. (5) DSCR mortgage: using a US DSCR loan for 70–75% of the purchase price reduces the India-origin transfer needed to just the 25–30% down payment.

India / NRI Buyer Guides: H-1B Buyer Guide — NRI Mortgage — Sending Money from India — FIRPTA Guide — Find an Agent

Frequently Asked Questions

What is the LRS limit for sending money from India to the USA?

The RBI Liberalized Remittance Scheme allows up to $250,000 USD per person per financial year (April 1-March 31) for authorized purposes including overseas property purchase. Two spouses together: $500,000/year.

What is the 20% TCS on LRS transfers?

Tax Collected at Source: 20% collected by your Indian bank on LRS remittances above ~₹7 lakh for non-education purposes. The TCS is refundable when you file your Indian ITR — but it's a significant cash flow cost to plan for.

How do NRIs send money from India to buy property in the USA if they have NRE accounts?

NRE account funds are freely repatriable — no LRS limits apply. NRIs can wire directly from their NRE account to US escrow or title company without LRS constraints.

How can I buy a US property worth more than the $250,000 LRS limit?

Combine both spouses' LRS allowances ($500K total). Use multi-year transfers. Combine NRE account funds (no limit). Get a DSCR loan for 70-75% of the purchase price, reducing the India-origin transfer to just the 25-30% down payment.