How to buy property in India?

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.

Click here to learn the NRI property procedure:

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.

How NRIs & PIOs can Buy Real Estate in India?

Buying a property in India is the dream of every NRI - non resident indian & PIOs, whether he or she is settled in the Gulf, anywhere in the west ranging from the UK, US, Europe or Australia. The trend to own a real estate in India has been fuelled by the host of options in premier homes, resorts and villas that are available nowadays. The time is also ripe as there is a surge in interest from everywhere in the world. NRI’s are mostly checking out online options these days to buy property in India.

Take time to look for the best option

If you think you can buy property during your two or a maximum of three week trip to India, you should do some real soul searching. Memories of visiting lawyers, property consultants would surface soon enough to discourage you from embarking on such a major investment in such a short time. If you are planning to buy a house in India for staying during your trips as well as for your retirement, you should plan well in advance.

As a NRI you may not know the story behind the several great real estate properties mushrooming all over the country, especially in metros across India. There could be long term plans of a flyover or an expressway close to your residence or a city railway project that could make your stay uncomfortable with the noise and pollution. Do an advance study of all upcoming projects near the proposed site before you think of investing as there could be many unknown facts.

And it is not possible for you to keep tab on each and every possible urban development planned throughout the year. You can invest in India as an NRI and offered special treatment compared to caps on resident Indians. Some of the real estate investment by NRI’s is governed by the FEMA or Foreign Exchange management Act. You can remit money from a bank outside India or use your NRI account in India.

Rules and regulations for buying NRI house in India

You would have to fill out form IPI 7 available at the Reserve Bank of India and you have to submit the necessary documents which will show that have already entered into an agreement to buy property in India. But you cannot sell the property before three years after acquiring or after the last installment date, whichever is later. India does not have easy outward remittance systems compared to its liberalized inward remittance policies. You won’t be able to remit money more than what was paid to buy the property.

The simple fact is that you cannot make any capital gains from the sale of the property bought in India. If you plan to make profits by investing in real estate, you would be disheartened as the profits cannot be taken away. The main reason why the government in India has relaxed the norms of buying real estate for NRI’s is to bring in more investments to the sector in foreign currency while at the same time offering them a chance to own house property for their stay in India.

Again, there is a catch. If you own more than one property in India, you will be allowed to repatriate only the sale proceeds of two properties not exceeding the amount they were bought with. The returns from the property cannot be repatriated as dividends. Even though real estate is a good buy in India, you need to check out several options with a wide array of reputed realtors catering to the NRI’s and their track record before buying property in India.

Why should NRIs (Non-Resident Indians) invest in Indian Real Estate?

If you are an NRI, then you have probably toyed around with the idea of investing in the thriving Indian real estate market. In fact, this market is at an all time high and everywhere you look; there are several opportunities to make investments which will have great returns! It is probably one of the most lucrative sectors to invest in these days, if you are looking to invest in India.

Why so? Well, since India is rapidly developing, it is becoming a destination which is extremely popular for all sorts of businesses. These include Information technology, FMCG, telecommunications, automobile and manufacturing industries and as a result of this, property prices are at an all time high. (Read More...)