NRI Buying Property in India? This article is for YOU.
NRI buying property in India is a standard occurrence. With the recent price correction in the real estate sector of India, many non-resident Indians, or NRIs, are looking to buy a property in the country. Investing in real estate is always a lucrative option. It can be viewed as an investment whose value appreciates over time. You can rent out the property and it will be a source of secondary income. It can also be your future home. Real estate in India will always be a beneficial purchase.
If you are an NRI planning to purchase real estate in India, this might be the best time to invest. But, as an NRI, there are some rules and regulations you have to follow. These are not applicable to resident Indians, so you might not be aware of them. It’s best to be informed about what is allowed and what is restricted.
Are you an NRI who already owns property in India? Having trouble managing it form overseas? A property management company can handle everything on your behalf. Here’s all you need to know: NRI With Property In India? Here’s How You Manage It Stress Free
We have prepared a guide that will help you understand the types of properties that you can and cannot invest in. We have also mentioned the documents required for each type.
Types of Properties in India Which an NRI Can (and Cannot) Invest in
Succinctly put, an NRI buying property in India does not need special permission to purchase:
- Residential Property
- Commercial Property
Property an NRI cannot purchase, without special permission:
- Agricultural land
While many countries have different rules and restrictions for the purchase of a property by non-residents and foreign citizens, the rules are quite simple in India. According to the Foreign Exchange Management Act or FEMA, an NRI need not take any special permission from the RBI before purchasing a property in the country. Also, there is no limit on the number of properties that an NRI can own in India. However, the only restriction is that an NRI is eligible to buy only residential or commercial properties in the nation. If an NRI is not able to come to India, then he/she can purchase a property after giving a power of attorney to any person of his/her choice.
Other types of properties such as agricultural land, plantations and farmhouses cannot be purchased by an NRI. If you are an NRI buying property in India falling in any of the categories mentioned above, you must request the RBI and can purchase one only after getting permission from the RBI. The RBI considers such requests of property purchase on a case-by-case basis.
Joint Ownership of Property by an NRI
There is a provision where an NRI can purchase the property of his/her choice either as a single owner or jointly with another NRI or resident Indian. But, joint ownership is not allowed with an Indian resident or another person who is not allowed to invest in an Indian real-estate property.
What if an Indian who owns property in India becomes an NRI?
An Indian resident who owns property in the country may become an NRI in the future. In that case, they simply continue to own the property in India. He/she is allowed to remain the owner of any residential, commercial, agricultural, plantation land or farmhouse that he/she owned before becoming an NRI. They are even eligible to sell the property irrespective of the date and time of the purchase. They can also rent out the property and earn rent after paying appropriate levied taxes according to the government of India. NRIs are allowed to gift or sell their property to any other Indian resident or an NRI too.
Must Have Documents for an NRI Buying Property in India
Apart from the finances, the most important thing to consider is arranging for the proper documents for purchasing a property. With proper documentation, your purchase procedure will go on smoothly, and there will be no legal complications. It also prevents property disputes. As an NRI, you must have the following documents to buy a property in India:
- Overseas Citizen of India Card or an Indian Passport: This is the most important legal document that an NRI must hold. If you have a foreign country passport, then you must have a Person of Indian Origin or PIO card or Overseas citizen of India (OCI) card.
- PAN Card: This is for taxation purposes, and you must have a PAN card. It is an indispensable part of the property-buying procedure in India.
- Power of Attorney: If you are not present personally in India or you want to hand over the management of buying procedure to someone, you must grant them a power of attorney first. It is needed for the registration, possession, and execution of the sale purposes. You must choose a person for granting a power of attorney very wisely as it can lead to a huge financial loss. Also, ensure to set the right terms for the power of attorney documents.
After preparing all the documentation, you will have to arrange the finances. You can either procure a bank loan or raise the amount yourself. After you complete the financial procedures, you should register the property in your name and then you can become the owner of it. It is also important to note the latest taxation rules. According to recent trends, it is advisable for NRIs to invest in residential properties. This requires lesser documentation, has faster loan processing and more tax benefits associated with it. That’s it! If you’re an NRI buying property in India, adhere to these regulations and you should not face any hurdles.