In case you are a non-resident Indian (NRI) who is planning to buy a property in India, there are a few things that you should always keep in mind before you make an investment. Will or fate might have paddled you overseas and given you the tag of an NRI but that doesn’t set you apart from any other regular Indians residing within the boundaries of the country especially when you are willing to buy a property. NRIs have played a pivotal role in the Indian real estate market over the years.
Due to the multiple rules and regulations involved in the process, property purchase might be a complex affair. Hence, if you are planning to buy a property in India, here are a few things that may help you sail through the investment process seamlessly.
Nature of the property
Being an NRI you can buy all sorts of immovable properties in India apart from agricultural land, farmhouse, and plantation property. To acquire these properties in India, you will have to get approval from the RBI and the government.
The NRIs are offered certain tax benefits. If you sell the purchased property within 3 years of time, it comes under the short-term capital gain wherein taxes are applicable. If you sell the same property after 3 years, then it will come under the long-term capital gain where the investment in another property is applicable.
All investments are supposed to be made in Indian currency using an NRE (non-resident rupee) and NRO (non-resident ordinary rupee) account from any Indian bank or FCNR (foreign currency non-resident) deposit account in order to avoid forex fluctuations. You can even apply for home loans in case of insufficient funds. However, the loan should be repaid in Indian currency using the above-mentioned bank accounts.
The RBI has given general permission to banks and housing finance companies registered with the National Housing Bank to provide loans to NRIs for buying residential property in India. Sanctioned in Indian currency, the loan has to be repaid using the same currency. However, the loan amount, according to the rules and regulations, cannot be credited directly to the bank account of an NRI and has to be disbursed to either the seller’s or the developer’s account. You can repay the loan using funds in an NRI’s NRO/NRE account or FCNR deposits.
Power of attorney (PoA)
Since you are residing outside the country, you have an option to give PoA to your friends or relatives in order to complete the property purchase process in India. The PoA can be general or specific about the rights your representative can exercise.
You should have a thorough background check done on the builders, owners, or real estate developers whose properties you are planning to buy. One should always try to engage in a direct transaction and avoid all forms of middlemen and brokers to avoid complications and scams.
EMIs and the Forex
Paying through equated monthly installments is one of the easiest ways to repay loans. However, the changes in Forex exchange may affect your EMIs and increase your problems. Thus, it is always recommended to make a payment through the rentals.
As an NRI, you should make investments in India by keeping these points in mind to make it a hassle-free process for you. Investing in real estate for NRIs has not only been a profitable investment but also works on an emotional ground where you can always be connected to your homeland. The Indian government has made this whole journey simple and problem-free.