NRI Investments: Things Every NRI Must Be Aware Of Before Purchasing Property In India

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    Slump or no slump, the idea of having an own property back home in India falls in almost every NRI’s bucket list. The recent game-changing policies like RERA and GST have further boosted their confidence as more and more NRIs are now seeking real estate avenues to invest in.

    2018 saw a fall in the rupee value against the dollar, which further paved the way to real estate investment. Not to mention substantial freebies and even discounts, apart from lucrative payment plans offered by developers to draw NRIs as well as domestic buyers to their projects.

    However, there are regulations and process related to the purchase that every NRI should be aware of when he/she is contemplating Indian real estate investment:

    • FEMA:

    The Foreign Exchange Management Act (FEMA) stipulates that an Indian citizen residing outside the country can invest in Indian real estate, provided that the property in question is not agricultural land, plantation property or a farmhouse.

    Also, there is no number of restrictions on the properties that can be owned by an NRI.

    • Currency:

    All monetary transactions must be done in Indian currency and through normal banking channels via an NRI account.

    • Home Loan:

    NRIs can use either their own funds or avail of home loans from banks or other financial institutions in India. As the rules pertain in India, they too can avail of a maximum 80% of the overall property value via loans from financial institutions.

    Repayment of these loans is generally done through the NRO, NRE and FCNR accounts or from other financial accounts permitted by RBI.

    • Documents:

    Apart from the usual documents required in any home loan disbursal, NRIs must also issue a Power of Attorney (PoA) – a key document required during the NRI home loan process.

    • Tax:

    All NRIs buying property in India have to pay property tax along with the applicable stamp duty and registration charges for the property. Income earned via rent in India is also subject to income tax so NRIs should ideally obtain a PAN card before investing in Indian realty.

    • Property Consultants:

    Although making a real estate investment is practically impossible without a property consultants, all NRI should be aware of the fact that in the case of residential real estate, a property consultant’s services comes at no cost to them.

    Credible consultants charge brokerage from the seller, and not from the buyer.

    • RERA:

    NRIs should understand the dynamics of Indian real estate have changed a lot in the recent times. Not only there are services like 3-d videos, conferencing and drone-mapping in play, the  platform of RERA can come very handy.

    RERA registration number will give an insight of the property as well as the past performance of the developer.

    Also, NRIs should only deal with RERA-registered real estate consultant or agency as it is an assurity of his credibility.

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