Yes, NRIs can buy most types of properties in India. However, they must be aware of some restrictions, mainly regarding agricultural land, plantation properties, and farmhouses.
Non-resident Indians have options in buying properties in India. This article will help you understand the needs that are required to be known when buying a property in India.
Process of Buying Property in India as an NRI
An NRI who is looking to invest in Indian real estate must understand that the process is very important. Here is a simplified outline:
Eligibility check: The first step you must take is to check if you are eligible as an NRI under the Foreign Exchange Management Act (FEMA).
Search for property: Research the property you like and connect with a reliable real estate agent to find a suitable property.
Plan your finances: Check and assess your finances, including the available funds and whether loans are needed.
Legal due diligence: Hire a lawyer to conduct a complete check on the legal title and compliance of the property.
Purchase funding: Open an NRO or NRE account in any Indian bank to carry out all the transactions.
On-site visit: Visit the property to ensure that it meets your expectations.
Sale Agreement: Draft the sale agreement and sign it with the terms and conditions of the sale.
Payment: Make all the payments through bank channels from your NRE or NRO account.
Registration: The property must be registered with the local sub-registrar office.
Power of Attorney: If you are not physically present in India, consider appointing a trusted Indian resident with power of attorney to handle the legal formalities and registration of property.
Taxation: Tax implications, including income and wealth tax, must be understood.
Types of Property NRIs Can Buy
NRIs can purchase residential properties and commercial properties in India. However, NRIs cannot purchase any farmhouses, agricultural lands, or plantation properties.
Ownership of these properties is possible only if they are inherited and received as an heir at the previous owner’s death. Buying Property in India as an NRI is straightforward except for the above-mentioned properties; NRIs can purchase all other immovable properties in India.
To buy agricultural land, plantation property, and farmhouses in India, they must get approval from the RBI and the government.
Documents necessary to buy property in India for NRIs
To purchase properties, a person must get and submit a certain number of properties. It is important to make sure all the documents are in hand before you start the purchasing process.
Some of the important documents that are needed are:
- Title deed in the name of the seller
- Any older title deeds if any
- Updated encumbrance certificate
- Tax receipts
- Mutation extracts
- Building permit
- Plan approved
- Occupancy certificate
- Completion certificate
- Allotment letter
- Commencement letter
- Possession Certificate
- Share certificate
- NOC from local authorities
- NOC from society
- RERA registration
It is important to check the history of property documents and analyze them with the help of experts so that any future problems can be avoided.
Benefits of Buying Property in India as an NRI
There are various reasons for NRIs to consider investing in Indian real estate. Some are as follows:
Potential in investment
Rental income: The properties can produce a steady stream of income in the form of rent. This offers a return on investment.
The growing population in India increases the demand for rental properties, making it an attractive option.
Capital Appraisal: According to the historical approach, the Indian market has always shown great growth potential. Owning a property can increase its value over time, and it can yield capital gains when resold.
For future use
A place to stay: Buying a property can be a form of investment when you return to India during your visits. Having a own place reduces the reliance on hotels or any rentals/ this gives a familiar feeling and a comfortable environment.
Retirement planning: It is a wise strategy for retirement if you have your property.
Benefits of tax
Tax deduction: Under some special conditions, NRIs can get tax reductions on rental income, which can help reduce the overall tax burden.
Tax exemption: some properties that are used as your residency may be exempt from tax.
Other benefits
Tangible assets: Real estate can be considered as a tangible asset that gives security and stability to your investments.
Restrictions for NRIs
The primary restriction for NRIs is their inability to purchase agricultural lands, farmhouses, and plantation properties directly. On the other hand, they can freely purchase residential and commercial properties in India.
Conclusion
Various reasons have been discussed as to why NRI property investment is going well. Some of the reasons for this process are affordable prices, high value of resale, tax incentives, etc.
The above-mentioned information is general, if you are going to invest in India as an NRI check with legal and financial professionals for advice.
FAQ’s
NRIs must follow the provisions of FEMA when buying property in India. They can get residential and commercial properties but not directly buy agricultural land, farmhouses, or plantation properties.
The tax on NRIs is a TDS of 1% if the property value is less than ₹50 lakhs and 20% if it is higher. They may also be subject to capital gains tax if they sell the property.
Yes, it is generally considered a good investment due to the potential for rental income and capital investment.
US citizens who are NRIs can own property in India, except for agricultural land, farmhouses, and plantation properties.