Besides exercising necessary due diligence, NRIs also need to adhere to certain specific laws and regulations, while buying, selling, or renting out real estate in India. The realty market in India, has always seen considerable interest from the Indian diaspora, as an investment avenue, with developers constantly striving to woo non-resident Indians (NRIs), they can choose from a variety of options, in the residential and commercial segments.
Buying and Selling
An NRI can either come to the country and buy or sell a property, or give a Power of Attorney (POA) to a relative and get the transaction done, without coming to India. NRIs can also avail of home loans in India. The documents for the loan may vary, according to the country in which the NRI is settled.
Generally, the term of the loan will be 10 to 15 years, while the amount that the NRI is eligible for, will vary based on age, income, education, etc. To finance the property’s purchase, it is advisable to use a non-resident external (NRE) account, as this will help the NRI to take back the capital invested in the property, when they resell the property.
Investing for the future
Once the primary residence is secured, NRIs can also use surplus funds, to invest in a second apartment and use it to generate rental income. However, they must be aware of all the bye-laws and regulations that apply to NRI investors, especially with respect to taxes, as rental income is taxable in India.
It is also taxable in other nations, except in cases where a treaty exists between the two involved countries, with regards to double taxation, he points out.