The most important aspect to consider for NRIs/OCI (Overseas Citizen of India) is determining the true value of the property in Rupee terms taking into account inflation and currency fluctuations. The NRI buyer must get a PAN (Permanent Account Number) card as it is necessary for all monetary transactions related to property purchase. NRE (Non-Resident External), NRO (Non-Resident Ordinary) accounts in an authorized Indian bank are required for easy repatriation of funds as well as tax benefits.
Before investing a large amount in a property the overseas buyer needs to evaluate in-depth the location, builder, type of property (commercial or residential but not agricultural land), loan availability from banks etc. also make sure that the investment is within the rules laid down by the Reserve Bank of India and FEMA (Foreign Exchange Management Act).
In instances where the real buyer is physically absent, having a legally valid POA (power of attorney) is necessary to protect against any fraud. Other documents such as a no-dues certificate from the seller, original title deed, clearance of outstanding bills or dues, environment and municipal clearances etc. should be in place and must ideally be done by an attorney.
Investing in real estate has tax benefits for the NRIs where on the purchase of a property they can claim a deduction of Rs.1 Lakh under section 80 C on the Income Tax Act, 1961.
Real estate is an illiquid asset so the NRIs/OCIs need to conduct due diligence before any purchase. But it is also true that with RERA and Benami Act the realty sector has become a more viable investment option for overseas buyers.
An attractive option for NRIs looking for quality residential property is Vaarivana from Pharande Spaces, a premium project of 3 and 4 BHK luxury private and twin villas set amidst vast green spaces. Offering top-class amenities including a 6 hole golf course combined with brilliant views of hills and valleys, Vaarivana is conveniently situated at Urse on the old Mumbai Pune highway, a strategic location close to Mumbai, Pune and Lonavala.
NRIs should consider investing in Indian real estate for several reasons. Firstly, it provides an opportunity to have property in their home country, allowing them to maintain a connection with their roots. Secondly, the Indian real estate market has shown steady growth over the years, offering the potential for good returns on investment. Additionally, investing in Indian real estate can serve as a long-term asset and provide a source of passive income through rental properties. The government has initiated many measures to facilitate smooth online property transactions, fueling NRI investment in the Indian real estate market.
When it comes to tax implications for NRIs buying property in India, it’s important to know the tax implications for better benefits. Investing in real estate in India offers tax benefits for NRIs, as they can claim a deduction of up to Rs. 1 Lakh under section 80C of the Income Tax Act, 1961, upon purchasing a property.
However, it is important for NRIs/OCIs to exercise due diligence before making any real estate purchase due to the illiquid nature of this asset class. Nevertheless, it is worth noting that the implementation of the Real Estate Regulation and Development Act (RERA) and the Benami Transactions (Prohibition) Act has made the real estate sector in India more attractive and secure for overseas buyers.
The benefits of real estate investment in India are advantageous for NRIs who are willing to buy a property in their own country. Other than sentimental values, it provides a tangible asset that can appreciate over time, potentially leading to financial gains. Real estate also offers a source of passive income through rental properties. Additionally, it serves as a hedge against inflation and can provide long-term stability. India’s growing economy and infrastructure development make it an attractive investment destination. Additionally, real estate investments can offer tax benefits and diversify one’s investment portfolio.
The Reserve Bank of India (RBI) guidelines for NRIs buying property in India are very lenient. On a happy note, NRI’s can purchase all types of properties in India, except agricultural land, farmhouses, and plantation properties. NRIs are free to repatriate the sale proceeds of their property in India. They can make the purchase through funds in their Non-Residential External (NRE) or Non-Residential Ordinary (NRO) accounts. Additionally, NRIs can avail housing loans from banks for property purchases, but they need to adhere to the loan-to-value ratio set by the RBI. It is advisable to consult with authorized dealers and adhere to the RBI guidelines for a smooth property purchase process.