An NRI's Guide to Investing in Indian Real Estate

India may have more than one million people in the Indian Diaspora, but most of these expatriates have a strong connection with their homeland. Traditionally, NRI Indians in the Gulf have always worked in the Gulf but have returned to India to settle down. As a result, most expatriates seem to prefer having a home in India, just as a fallback in case something goes wrong and they want to come back.

Buying Real Estate in India

In the past, buying real estate in India was not tough but it did involve a lot of red tape for the locals, and this red tape doubled for NRIs. Times have changed though, as the government is more welcoming to foreign investment. With the help of a property developer, an attorney and an accountant, the buying process has become simpler. Have a look at this short guide on how the property-buying process works in India.

Type of Property:  NRIs can purchase any kind of commercial and residential property in the country. They can also purchase any amount of property anywhere in the country, and they are eligible to inherit property from relatives. However, NRIs cannot buy or invest in agricultural land, plantation land or farm houses in India. NRIs are also not allowed to inherit these properties. There is no restriction by the RBI, or Reserve Bank of India, regarding these properties as well.

Funds: The monetary transaction for the property purchase should be in rupees and it should be through normal banking channels such as an NRI account. In case you want a loan, local lenders do lend to NRIs but they may charge a higher interest rate. You will have to provide detailed information about the property, the builder and the underlying land. Most builders and developers already have financial contracts with lenders and once you decide to buy the property, they will direct you to a lender. This makes the process easier because the lender has already verified the documents of the builder and the project, and your loan will be cleared quickly. Even with the mortgage, there are clear rules regarding financing of a home by NRIs. For example, a maximum of 80 percent can be paid by the bank but the seller will have to be paid upfront or in installments by the borrower. NRO, NRE channels are to be used for the remittance and the NRI borrower has to use the same channel or bank account to pay off the loan.

Verification: Even with a known builder or developer, it is necessary for you to hire a real estate lawyer and an accountant to verify the land title and the bank releases; check mortgages; verify no-dues certificates; verify approvals and permits from civic authorities; and check for pending bills and loans. Always check that the property has no outstanding water or electricity bills or any other dues pending from the authorities at the time of purchase.

Taxation: Tax laws are simple for NRIs. They have to pay the same stamp duty and registration fees as regular citizens. At the same time, they are also offered a huge number of benefits in the interest they pay in the form of a home loan. Standard deduction in the form of income tax has to be paid. Some countries also have taxes on worldwide income in case you are residing in that country but have property in India. You can bypass this ruling if your country has Double Tax Avoidance Agreements with India, but it’s a good idea to hire an accountant to deal with this issue. Do not try to fool the tax man in India or abroad as it generally makes them angry and results in a huge legal and financial tangle.

Real Estate Developers: Always search for and hire a good international or national real estate agency to help you find property in India, advises the Times of India. For example, you may have heard of national property development firms like Unitech. Unitech is well known, and there is very little chance of being cheated. However, an international or national real estate agency will vet the Unitech property in India, and take care of the necessary legal, financial and accounting headaches before setting the property in front of you for consideration. This not only saves you time but also ensures that you get good value for your money and trusted properties for review.

Buying their own home or investing in an extra property is a dream come true for most NRIs. Now with the fluctuating rupee-to-dollar rate and the help of reliable property developers, it has become possible for NRIs to invest in more than one property in India at an affordable price. Buying property in India is a good idea and it is affordable.

There are so many wonderful places where you can properties in India. You can look at Bangalore, Ahmedabad, Hyderabad, Kolkata, Chennai and many more. If you do your research correctly, you will get a good property but you should also be careful, according to The Economic Times. Property rates are more or less the same in each city or locality and there will not be dramatic variations. Do not be swayed into buying property that appears to be cheaper than normal as it may be under lien or litigation. If you buy through a reliable property developer, you can bypass all these problems and be assured of the legality of your property purchase.

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