tax implications of moving b/w the US and India

You have to report the capital gain of presumably 30k on your US tax return. Selling fees and transfer taxes reduce your capital gain, and improvements to the home increase your capital gain, so your actual capital gain may be less or more than than 30k.

Also I find nothing in section 121 that says that the section 121 exclusion only applies to homes in the US. If you lived in the home as your primary home for 2 years when you sell it (technically 2 of the last 5 years) then you can exclude the capital gain on your federal return. But having a green card you probably have to stay mostly in the US.

The US tax rate on your capital gain is 15%, maybe 20% in 3 years from now if Bush tax cuts expire. If India taxes your capital gain, then on your US tax return you take a credit for the tax you paid to India, up to the maximum of 15% or 20%. Do you know how India taxes capital gains on the sale of a house?

As for state tax, you'd have to report the capital gain on your state tax return too. Section 121 applies in most states (which makes no sense as all states are bankrupt). However I don't think you could get a credit for taxes paid to India -- even if India taxed it at 30% and you used 15% of that to balance your US federal liability, you still have 15% more to use up but I don't think you can use it on your state return.

Wonder if taking the deduction of foreign tax paid would be better then.

I assume your use of the word "invest" means that you plan to either buy a house - rent it - sell it or buy a house - hold it for investment - sell it.

If you are a resident alien of the US at the time of sale, you would account for the gain or loss on the sale of business property on Form

The amount of tax you will pay on any gain will depend upon the following factors: Tax law at the time of sale (current law on this issue expires at the end of 2012). The amount of your ordinary taxable income. Your filing status.

You may or may not be eligible for either a foreign tax credit or a foreign tax paid deduction. This will depend on how India treats your sale.