NRI Can Buy Property in India- All that You Should Know

One of the biggest and probably an achievement would be buying a property. The joy and feeling of buying a property are surely unexplainable. Regardless, of wherever you live, having property in your nation is an ultimate joy.
In case you are an NRI and wish to buy a property in India. With a plethora of NRI investment options available in India, a common question could be whether the NRIs can buy property in India or not?

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Well, the NRIs can buy or own a property in India. Yes, the NRI real estate investment is a lucrative option. However, there are legal provisions, which the NRI should be aware of before owning or purchasing the immovable property in the country within the FEMA. The FEMA stands for Foreign Exchange Management Act.

The NRIs and PIOs are treated at par when it comes to investment in real estate. 

Understanding the Properties Where NRIs Can Invest

Through a circular, the Reserve Bank of India has permitted the NRIs to buy any commercial or residential property. This means that the NRI can buy property in India. 

An investor does not need any certain permit from the Reserve Bank of India. Besides, no other intimation or communication is required to send to the RBI. With the general permissions existing, an NRI can buy any number of both commercial and residential properties. Moreover, the income tax laws permit an NRI to own as many properties as one can.

In any case, the NRI is unable to visit India, then the relevant documents for the purchase of the property can be executed by a person who has the Power of Attorney. It is important to understand that the NRIs cannot buy any plantation property or agricultural land in India. In case any NRI is interested in buying the farmhouse or plantation, then certain permission is required from the RBI. The Reserve Bank of India considers this on a basis of case-to-case. 

Understanding Joint Ownership

The NRI can buy property in India as a single or joint-owner with any other NRI. Here, it is important to understand that an Indian resident or a person who is not permitted to invest in the property in India cannot become the joint-holder in any such property. This is regardless of the second holder contribution towards the buying.

The Funding and Financial Transactions

When buying the property in India, the NRIs need to carry the transaction in Indian rupees and via local banks. The NRIs that wish to invest in the property in India should have the NRI account in any of the Indian banks authorized. 

The NRI property investors need to route the transactions through the Indian banks, make sure they use the NRE/NRO accounts for the complete inward money remittances. They are permitted to submit the post-dated cheques or choose for the ECS from NRE, NRO or FCNR accounts. 

Before, approaching any banks for the funds, the NRI needs to verify all the documents. Next, get a certificate from the seller, which states that there is absolutely no lien attached to the respective property. In case the property is held jointly or inherited by a seller. Ensure the title deed is clear. The NRIs also need to ensure that no other dues or bills with any authority are to be cleared.

What if You Become an NRI Later?

It is somewhat possible that right now, you own a property in India and subsequently become an NRI. 

Well, in such a circumstance, you can continue to hold the property in your name in India. The NRI is permitted to continue to own the plantation property, farmhouse or agricultural land that you owned when becoming an NRI. This is otherwise not permissible to buy after becoming the NRI. Moreover, it is permitted to let out the property, regardless of when it was acquired. Any rent received from any such property can be easily remitted. The condition is that the Indian taxes should have been appropriately paid on any such rent.

The NRIs are also permitted to either gift or sell immovable property to any Indian resident. Apart from any plantation property, farmhouse or agricultural property one can also transfer or gift any property to any NRI.

NRI Real Estate Investment- Things You Should Know

The following are some of the key pointers that everyone should know in regards to the NRI real estate investment:

  • As discussed above, the NRIs cannot purchase any plantation or agricultural land in India. However, they can purchase any commercial or residential properties. In case there is a certain reason behind the agricultural land scouting, the RBI then reviews such cases. 
  • To buy properties in India, there is no such cap on the home loans that one might take.
  • You can authorize the person to conduct the transaction on their behalf such as while registering the property, the Power of Attorney needs to be given to them. This person will sign on behalf of the NRI and produce a copy of the Power of Attorney to the respective authority.
  • Just like any other Indian resident buying property in India, the NRI is also liable to pay the taxes like registration fee, stamp duty, post-buying yearly property taxes and the GST in case the property is still under construction.
  • You can also invest in a property in the nation to earn a good rental income. However, you will be taxed at 30 per cent through tax deducted at source and the remaining sum will be repatriated under the FEMA rules.
  • In case proceeds have been earned via selling the immovable property, it will be repatriated after the deduction of between 20 per cent and 30 per cent TDS. This is on the premise of the short or long-term capital gain.

Wrapping it Up

When it comes to NRI investment in India, real estate is an ideal option. Investment is a big decision, give time, do the research. Make the NRI real estate investment decision taking into account every important aspect.

Happy Investing!

Past 5 Year annualised returns as on 01-07-2024

^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.

*All savings are provided by the insurer as per the IRDAI approved insurance plan.

Tax benefit is subject to changes in tax laws. Standard T&C Apply
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^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

#The lumpsum benefit is calculated if policyholder invested ₹10000 monthly for 10 years in the fund with a policy term of 20 years. This Point To Point past performance data of last 10 years has been used to illustrate a scenario for the customers benefit. It is assumed that the past 10 years returns would have also been delivered in last 20 years. This is not guaranteed and not in anyway indicative of what the customer may actually get 20 years from now. The investment is subject to market risk and the risk is borne by the policyholder.

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