Should NRIs invest in property in India? Absolutely, yes.
NRI investments in India have seen a sharp upward trend due to the relaxations provided by the government in order to attract more foreign investments. Indian property landscape is proliferating slowly into a mega-market that comes with the promise of hefty profits for all those who are interested to invest today.
So, if you are an NRI looking to invest and make some significant gains in the real estate sector, here is a quick guide for you on how to get started and what all things must be kept in mind.
The act makes allows any Non-residentially Indian with a valid Indian passport to make real estate purchases without any restrictions in India. The Reserve Bank allows this in conjugation with Foreign Exchange Management Act. Therefore, you needn’t worry about anything or seek permissions before buying land in India. It’s a default right available to NRIs.
Once you have made the decision to buy a piece of land or a fully constructed property, you’d have to pay the seller in Indian currency. It’ll be wise to do so with an authorized bank in India. Most banks have the facility to serve an NRI account which is a mandatory term while buying property. You also have to make sure that your bank history and identification proofs are all clear.
Just in case, you’d like to go for funding via a domestic institution in India, the government has made it really easy for you. Most high-authority banks in India offer easy NRI loan schemes with assured benefits. You will, however, need a clean NRI account in the same bank to avail the facility.
After verifying your bank history and checking all your documents, the bank can process a loan for 80% value of the property you intend to invest in and 20% would have to be arranged from your side.
Although Regulatory act allows you to buy any kind of land in India, there are certain conditions to it that you must bear in mind.
Property sale and purchase levy same tax laws as of the residential Indians to NRIs. There are two notable aspects of it.
If as an NRI, you hold the property for more than three years, then your tax deduction falls under long-term income gains which is taxed at a lower rate. We at Spacio, also suggest the same for this special benefit available to NRIs.
However, if you invest in the property and sell it out before three years, then the taxes are deducted as short-term gains on investment, that are taxed at a higher rate.