Are you an NRI wanting to take a plunge into real estate in India? Buying a property in India requires threading the water carefully. Buying a property takes investing not only financially but also mentally and physically, which can be quite daunting. An NRI can make the best investment in real estate in India for practical or emotional reasons. It can either be a long term investment or a short term investment. They can either sell it at an appreciated value or use it as a long term retirement plan when returning to India for good.
Whatever the reasons, the most apparent barrier for someone living outside of India to purchase a home in India is distance. After all, maintaining a property from overseas is not straightforward! As the growth of real estate in India is steady, buying a property in India will be an excellent investment. If an NRI wants to invest in a property in India, the next step is to grasp the fundamental guidelines for investing in Indian property. Let’s explore what an NRI investment in India should consider before purchasing an Indian property.
Six Crucial Considerations For NRI Real Estate Investment In India
Here are six things an NRI investor needs to understand before investing in real estate in India.
- Types of Property An NRI Can Invest In
NRIs can invest in both commercial and residential properties in India. Check out why open plots in Hyderabad are selling like hotcakes. There is no limit to the number of properties an NRI can acquire in India as the growth of real estate in India has been rapidly flourishing. However, NRIs cannot purchase farmhouses, agricultural lands, or plantations. But an NRI can have villa plots in Hyderabad. Such properties are permitted only if donated to or inherited by the NRI.
- Regulatory Act
The sale and acquisition of Indian property by non-resident Indians is strictly regulated by the Foreign Exchange Management Act FEMA of 1999. The Reserve Bank of India (RBI) sets the regulatory framework and instructions. The positive aspect is that the Reserve Bank of India’s guidelines are straightforward and simple to grasp. And to invest in real estate in India, no previous approval from the government is required.
- Financial Transactions
All transactions by an NRI investing in real estate in India should be conducted in Indian currency and via Indian banks. Payments for purchases can only be made in India through normal Indian banking channels via inward remittances from anywhere outside India or from funds held in any Non-Resident External (NRE) account/Foreign Currency Non-Resident (FCNR) account/Non-Resident Ordinary (NRO) account maintained in India.
- Funding For NRI Real Estate Investment in India
An NRI can get mortgages just like an Indian resident, as the future of real estate in India is flourishing. Various banking organizations in India provide NRI house loan packages. However, the paperwork procedure to acquire these loans varies. To fund the purchase as an NRI, keep in mind that lenders are willing to support purchases as long as the documentation is clear. Before proceeding, the NRI should hire a lawyer to verify all the paperwork.
- Power of Attorney
An NRI can acquire real estate in India by hiring a trustworthy representative and granting this individual a Power of Attorney (POA) to execute transactions on the NRI’s behalf. This is particularly beneficial if the NRI wishes to invest in a property still under construction or development. However, it is critical to ensure that the document is drafted correctly, preferably with the guidance of a lawyer, and that the NRI’s interests are safeguarded.
- Tax Advantages of Investing in Real Estate in India
NRIs purchasing real estate in India have tax benefits similar to those of Indian residents. They can buy plots in Hyderabad for investment purposes. Non Residential Indians can claim a deduction of up to one Lakh Indian Rupees under the Section 80C of the Income Tax Act of 1961. Similarly, NRIs can deduct stamp duty, registration, municipal taxes, and 30% on their rent.
However, an NRI must pay TDS at 1% on any property worth more than INR 50 lakhs. If an NRI sells the Indian property within three years after acquisition, it is deemed a short term capital gain, and the earnings from the property are taxed. If they plan to sell the property after three years, investing in another property can reduce the long term capital gains tax.
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Conclusion
This is all! However, remember that acquiring real estate in India is only the first step, and the obstacles that may arise along the process can be rather draining. An NRI needs someone to assist them through the whole deal – from deciding whether to let out the property, screening and choosing tenants, to regular maintenance of the property, and dealing with the financial and taxation aspects of the property in India. Therefore, a person with power of attorney is important.
If you are an NRI looking for the best city to invest in real estate in India, then Hyderabad is your best option! Hyderabad is a booming city with excellent infrastructure, a budding IT hub, serenity, and fantastic connectivity. In other words, an NRI needs the best real estate company in Hyderabad!
If you are wondering how to invest in real estate in India, consider the above key points and take care of everything for an NRI property owner! If you are an NRI looking to buy open plots in Shankarpally for a problem free investment, contact Future Property today!
