If you hold an Indian passport but stay abroad for most part
of the year for the purpose of business or employment, then you are regarded as
NRI. One of the lucrative investment opportunities for NRI is the Indian real
estate market. According to law, NRI cannot buy agricultural land in India.
However, they can own houses, flats or land for residential or business
construction. They can also buy or sell such properties.
Why should NRIs invest in Indian real estate?
There are several good reasons why NRI should buy property
and houses in India.
These are:
* If you own your own house or flat in India,
you eliminate the cost of hotel rooms when you return – a cost that is becoming
increasingly prohibitive.
* The falling value of rupee makes real estate a high return
investment.
* Special tax benefits are available for NRIs who buy
property in India.
* Legal hurdles have been removed and the process has been
simplified.
* Confederation of Real Estate Developers in India (CREDAI)
is floating great offers especially for NRI.
You can buy any immovable property in India
except agricultural lands, plantations and farm houses. You can also sell them
or transfer them as gifts. Inherited properties including agricultural lands
too can be transferred as gifts.
Important things to know about NRI buying real estate in India
Here are some important things that you should know about
NRIs buying real estate in India:
* You can get home loans to finance your buying of real
estate. A maximum of 80% of the cost can be obtained as loan while the rest
have to be paid directly by you.
* This residual amount can be paid directly from NRE or NRO
account. Repayment of the loan is also to be done through the same channel.
* You have to bear the cost of stamp duty and registration
duty but have to pay no other tax.
* All the interest towards the home loan is deductible from
the taxable income of the NRI without any upper limit.
* If you sell the property, you will have to pay capital
gains tax like a resident.
* If you give your property in lease, then the income from
the lease is taxable. If your country of residence does not have double tax
avoidance agreement with India,
you may have to pay tax on it in that country also.
* When you buy real estate in India,
you need to watch out for several pitfalls. These are as follows:
* Check if the seller has a clear
property title, especially if the property is inherited.
* Ask for a no due certificate from the
seller. This certificate shows that there are no outstanding due to the
municipality, electricity etc.
* If the original flat or house had been
constructed with a bank loan, a bank release letter must accompany the sale to
show that the loan has been paid in full.
* Check that the house has all the
relevant permits and licenses from the civic authority.
* It is necessary to make sure that the
property is not under litigation.
You can buy the built property
from real estate developers who also take care of maintenance. Often, expos are
organized advertising such real estate deals. However, the information given in
these expos may not always be reliable. It is best to get some relative to
clarify the situation in India
or to visit the country and see with your own eyes before you invest in real
estate in India.
To get started on Real Estate, it is required for all NRIs
to apply for a PAN card number in India.
You can apply at http://www.pancardonline.com/.
The process is simple. Get started soon.
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