Key Rules for NRIs Investing in Properties in India.

 Non-Resident Indians (NRIs), Persons of Indian Origin (PIOs), and Overseas Citizenship of India (OCIs) are always looking for lucrative ways to invest in India. Real estate has always been a favorable option for NRIs due to the emotional connection they have with their homeland. Many NRIs aim at settling down in India after retirement, and for that purpose, investing in real estate in India is a good idea. Even looking solely from an investment point of view, it is an attractive proposition. NRIs can expect 7-8% appreciation annually over ten years.

To encourage more Non-Resident Indians to invest in the Indian real estate market, the RBI and Foreign Exchange Management Act (FEMA) have laid down a few guidelines. Here are some more rules that NRIs need to keep in mind before investing in properties in India:

Types of properties

NRIs can invest in as many residential and commercial properties as they wish in India. However, agricultural land, plantation property, or farmhouses can only be owned by NRIs as long as they are inherited or gifted.

Financing sources for property purchase

NRIs can purchase properties in India using remittance services through foreign banking channels or they can simply use their NRE Savings Account, NRO Savings Account, or FCNR Account for the transaction. Payment cannot be made with foreign currency or a traveler’s cheque. NRIs can opt for home loans for the purchase of property in India.

How to manage the home loan

Home loan for such properties is granted in Indian Rupees. EMIs can be paid via the NRI’s NRE Account, NRO Account, or FCNR Account in INR. If there are rentals received for the property purchased, that income can easily be directed towards the payment of the EMIs.

Joint ownership of property

NRIs can have single ownership of property owned in India or they can jointly own it with another NRI. Resident Indians or people who aren’t eligible to own property cannot be joint owners of the property along with the NRI. They cannot be named joint owners even if the second named individual isn’t contributing any money towards the purchase.



Property ownership after becoming an NRI

There are many resident Indians who move abroad due to lucrative opportunities and hence become Non-Resident Indians. There’s no reason to worry in this case. If you own property in India, you can continue to remain the owner of the property even after becoming an NRI. This also counts in cases of farmhouses, agricultural lands, and plantations. Resident Indians who owned agricultural lands, plantations, and farmhouses before becoming NRIs can continue to legally be owners after becoming NRIs. This is not possible for NRIs planning to invest in Indian properties.

Income from property investments in India

NRIs are allowed to rent their properties owned in India and get the rentals dispatched abroad after payment of taxes and other liabilities. NRIs need not take permission from the Reserve Bank of India (RBI) for the same.

Taxes on the profit earned from real estate investment

NRIs can earn profits from their real estate investments in the form of rent or long-term or short-term gains. However, these profits are taxed in India. Rental income accrued from the property in India is taxable for NRIs. If an NRI sells the property within 2 years of purchase, they earn short-term capital gains. This kind of gain is taxed under the applicable slab rate for NRIs. When an NRI sells acquired property after 2 years of purchase, it is considered a long-term capital gain. Long-term capital gains are taxed at 20% for NRIs.

Buying a property in India is a decision that is well-calculated as well as emotional. Whether you want to invest in a property in a quaint little town for vacations or build a home in the suburbs to settle in after retirement, SBM Bank offers Home Loans to help you make it happen. Enjoy end-to-end assistance, best-in-class interest rates, flexible tenure, and a world of privileges and benefits that will make your home-buying process effortless.

Comments

Post a Comment

Popular posts from this blog

Why is India a Good Destination for Investment

Image
India continues to be an attractive destination for the investors, and form a huge part of the world’s fastest-growing economies. Indian residents and Non-Resident Indians(NRIs) are actively looking to earn money by Investing in India. Also, if the investments are made by NRIs then it is treated as ‘foreign investments’ as per the Indian foreign exchange regulations, making India one of the top recipients of  foreign remittances   from its diaspora. Here are some reason why India is a good place for investment:- Indian economy is one of the world's fastest-growing economies According to the Department of Promotion of Industry and Internal Trade, India has crossed the $70 Bn mark in the Fiscal Year 2019-20 and recorded a total FDI inflow of $73.45 Bn, ranking amongst the top countries for investments by leading investors. Indian infrastructure story More than $1.5 trillion investments have been planned for Indian infrastructure for the next two decades across the key government...
Read more

All you need to know about an FCNR Account.

Image
  Providing NRIs with lucrative returns without much hassle was the main objective with which the FCNR account was first introduced. This primary objective still holds.  What is an FCNR Account? FCNR stands for Foreign Currency Non-Resident Account. It is a term deposit account popularly known as an FCNR deposit . These fixed deposit accounts are opened for depositing foreign currency income earned overseas. The account is maintained in the same foreign currency as deposited.  NRIs (Non-Resident Indians) and PIOs (Person of Indian Origin) are eligible to open an FCNR account with an authorized bank or dealer.   FCNR account is more beneficial to those NRIs who are sure to repatriate their funds from the account on maturity. Also, FCNR deposits are a good option for NRIs who are looking for a secure hassle-free fund deposit option in India. You can book your FCNR Account in  US Dollars Canadian Dollars Australian Dollars Pound Sterling Swiss Franc Euro Japan...
Read more

What are the benefits of opening an NRI account?

Image
NRI account s can be opened by Non-Resident Indian who reside outside the geographic territory of India. This account facilitates account holders to manage transactions in the currency of their country of residence. There are types of NRI saving account one can opt to open: NRE Account NRO Account NRE Account: NRE (Non-Resident External) account is accessible to deposit overseas savings as rupee dominated. It is an account opened in India in the name of NRI. One can open a joint account between two Non-Resident Indians or a Person of Indian Origin with the SBM NRE savings account . Benefits of NRE account: Interest 6% p.a. with monthly payout of interest Tax-free returns Fully repatriable Competitive forex rates Dedicated Relationship manager Preferential pricing on a host of products and service Premium privileges with Personal concierge NRO Account: NRO (Non-Resident Ordinary Rupee) is an account opened in India by the name of NRI to manage the income earned in India. That earning c...
Read more