By Anjali Kumari
NRI investments in India have been a hot topic over the years. With the Indian government’s attempt to regulate the real estate industry, providing more transparency and accountability through RERA, NRI’s interest in the Indian real estate market has increased. NRIs can benefit from a high return on investment and a cheaper initial investment by investing in Indian real estate. There are several directives and regulations concerning NRI Investments in India which you should be aware of to avoid any unexpected obstacles in your investment path.
Buying a home for a Non-Resident Indian (NRI) has never been easier due to new property laws. If the property is not agricultural land, plantation property, or farm, anyone with an Indian passport can invest in Indian real estate.
Rules to know for NRIs for real estate investments in India
Understanding the financial landscape is one of the most critical aspects of an NRI investing in Indian real estate. If you are planning to invest in real estate in India, there are a few things that NRI should consider before you start buying properties:
If you have an Indian passport, you don’t need to apply for approval before investing in real estate in India. To encourage more foreign investment, the Reserve Bank of India has simplified the restrictions. The provisions of the Foreign Exchange Management Act apply to real estate transactions (FEMA).
Place money in quality markets
There is no limit to the number of properties in which an NRI can invest. A Non-Resident Indian (NRI) or Person of Indian Origin (PIO) can buy as many residential and commercial properties in India as they want. However, when it comes to agricultural land, plantations or a farm, foreign investment is limited. Such properties are only allowed if the NRI in question inherited them or received them as a gift.
A strong return on investment requires investing in a property with significant capital appreciation potential. E-commerce and computer related businesses have exploded in the South Indian market, with cities like Bangalore, Hyderabad and Chennai offering excellent returns on investment. Engaging the services of a real estate advisor will help you stay on top of real estate trends in India and the best emerging areas to invest in. These professionals can also ensure that you receive top-notch property management services, ensuring your safety and peace of mind. to listen.
Financing and financial operations
All real estate transactions in India must be done in Indian currency and through Indian banks. One of the requirements is to open an NRI account with a recognized Indian bank. If their papers are in order, an NRI can simply get money for the acquisition. In India, there are several NRI home loan programs offered by various banking organizations. If you are having your property financed, make sure you have at least 20% of the value of the property to invest from your resources. You can get cash for up to 80% of the value of the property.
All of your transactions must go through Indian banking systems, so use your NRO / NRE account for all incoming remittances. You can also use your NRE, NRO or FCNR (Foreign Currency Non-Resident) account to issue post-dated or ECS checks.
Check that all of your documents are in order and have been confirmed by a lawyer before applying for financing from a bank. If you are buying a house, receive a certificate of non-assessment from the seller, and if it is an inheritance or joint ownership, seek to clear the title. Also make sure that no debt or overdue payments are owed to any authority.
Choose a reputable entrepreneur
If you are an NRI, you should select a builder with a solid background in the real estate industry. You need to be able to trust the builder you choose to invest in as you may not be physically there to check the condition or quality of the build. A professional builder will also have all the necessary permissions and certificates, which can speed up the home buying process.
If you are looking for a trustworthy investment partner to invest with, Assetmonk may be an option for you. Assetmonk offers some of the best investment options in Bangalore, Chennai and Hyderabad. The products offered by Assetmonk are categorized into Growth, Growth Plus and Yield products and offer an IRR of 14-21%. The properties offered by Assetmonk are carefully reviewed by professionals and listed only after due diligence.
If you are buying a property that is still under construction, you will need to provide a power of attorney to your builder or a trusted partner.CHuttersnap / Unsplash
Buying commercial real estate
If you are looking for a decent return on your investment, look for commercial properties that are in high demand by blue chip companies. This will ensure regular returns as well as strong capital growth. The return on investment for a well-located commercial property leased by a blue-chip company can range from 6-10%, almost double that of a residential property.
If you are buying a property that is still under construction, you will need to provide a power of attorney to your builder or a trusted partner. Seek legal advice on how to structure the documents so that there is no risk of forgery and your investment is protected while the property is being built. Since they do not live in India, it may happen that the named person is not able to physically purchase the property; however, POA (Power of Attorney) is available to assist you. This implies that an NRI can choose a relative, such as a cousin, friend or even a colleague, to execute the transaction on their behalf (legally).
As an NRI, you can take advantage of most of the tax incentives available to Indian residents when purchasing real estate. Section 80 C of the Income Tax Act 1961 allows you to claim a deduction of Rs. 1 lakh. If you sell real estate within three years of buying it, this is considered short-term capital gain and any profits you make from it are taxed. If you sell the house after three years, you can invest in another property to reduce long-term capital gains tax.
TDS Information for NRI Property Sale
As for the tax benefits, they are pretty much the same for everyone who lives in India. NRIs are entitled to the same tax benefits as Indian residents. In addition, if an NRI purchases a property worth more than Rs 50 lakh, they must pay a TDS withholding of 1%.
If the property is uninhabited and classified as “independent”, it will be exempt from wealth tax. If they don’t rent it for at least 300 days a year, they will have to pay wealth tax. This rule only applies to the first property. They are expected to pay a tax of 1% of the value (net of existing debts) of successive empty properties exceeding Rs 30 lakh.
NRIs should perform a mandatory builder audit trail by reviewing the real estate company’s social media profiles and other internet forums.
To get a clear picture of how satisfied existing customers are with their investment, one should seek first-hand experience by contacting them online.
The Confederation of India’s Association of Real Estate Developers (CREDAI) holds exhibitions for NRIs every month, helping them assess various investment choices and provide cash loans from major banks. There are other simple investment choices, as well as a lower down payment amount. Therefore, before investing in real estate in India, you should review all of CREDAI’s offerings.
(Disclaimer: This is a sponsored article and includes sponsored links.)