This is the best time for non-resident Indians who wish to buy a property in India. With favorable currency rates and changes to government policies, buying a property here is no longer a hassle. Real estate investments by NRIs in India grew incredibly from 2011 to 2016. Whether you are buying property for residential or investment purposes, the process is a little complex and requires careful assessment. We are here with the top five things that you must keep in mind before eyeing any property in India. Without further ado, let’s get started.
Nature of the Property
NRIs can show their interest in whatever property they like. However, there are some exceptions that you should be aware of. You can purchase agricultural land, farmhouses, and plantation properties only after getting approval from the government as well as the RBI. Therefore, before proceeding, you should consider the type and nature of the property.
Being an NRI, if you sell the property you purchased within three years, it will come under a short term capital gain where taxes are adequate. On the other hand, if you sell the purchased property after three years, it will count as a long term capital investment, after which you can invest in another property as well. Tax deducted at source is usually done at the rate of 20.6 per cent on long term capital investments and 30.9 per cent on short term capital gains. Moreover, note that the final taxation is the same for NRIs and residents of India.
NRIs can now apply for home loans as the RBI has permitted banks and housing finance firms to provide loans. Additionally, the loan sanctioned in rupees should be repaid in rupees only. The loan amount will directly go into the developer or the seller’s account and not into the NRI’s bank account. Repaying the loan is possible using NRO/NRE accounts or deposits.
Power of Attorney
Since NRIs reside outside of India, they can give power of attorney to their friends or relatives to ensure that the purchase process is carried out smoothly. Either way, it can be a general power of attorney or a detailed one that specifies the rights of the representative. NRIs should make it a point to thoroughly go through the background of the builders and owners. Run a background check on them to verify the property that you are planning to buy. Try not to indulge middlemen or brokers during transactions and keep them direct to avoid fraud. This factor will also prevent complications in the process.
Take note of the Regulations
At the time of purchase, the property you are buying must be in accordance with FEMA directives. The repatriated amount should be the same as the amount paid for the property if the residence was acquired in foreign exchange. In such cases, the NRI is only allowed to repatriate up to $1 million per year.Furthermore, citizens of Bangladesh, Pakistan, China, Iran, and Sri Lanka must seek approval from the RBI first for repatriation of the purchasing process. If it is a residential property, the sales procedure is restricted to less than or equal to two properties. Other than these mentioned cases, an NRI can buy property by following the same rules as any other Indian resident.
Keep these points in mind while purchasing a property in India to get through the process easily. India is a land where investments are highly profitable for NRIs. With special rules and policies by the Indian government, many of you can fulfill the dream of buying a property in India.