India has one of the fastest growing real estate markets in the world. During the last global recession, India was one of the few countries to have not shown any major adverse effects. NRIs or non-resident Indians, are aware of this fact and prefer investing their foreign currency savings into the growing Indian real estate industry. NRIs would also like to own a home in India for a sense of nostalgia and connection to their motherland as well. NRI real estate investment in India is growing rapidly.

Though investing in India real estate from abroad may appear perplexing initially, it soon becomes clear that the Indian laws and regulations are very lenient and allow NRIs to buy residential or commercial properties in India without prior permission. Here are some guidelines for NRIs that should be kept in mind. These details should help you invest wisely in a property in India while staying abroad.

Below are the tips For NRI Real Estate Investment In India:

Restrictions

•  NRIs are not allowed to buy more than two residential properties in India.

•  NRIs are not allowed to invest in farm houses, agricultural land or plantations. Although they can own these categories of properties, provided they are inherited or gifted to them.

Financing

• NRIs are eligible for taking home loans for buying residential plots, building homes or buying a ready-made one. The rules for applying for a home loan are similar as those for resident Indians, with one exception – income and educational qualifications matter when it comes to the amount of home loan applied for by an NRI.

• Banks allow 80-85% of loan amount against the property value and allow shorter payback periods of 5-15 years to NRIs as compared to about 30 years to resident Indians; this is because they are expected to have higher repayment potentials than resident Indians. But when it comes to loan interest rates, NRIs can avail of the same rates as the resident Indians.

• In the case of loan default, do remember that the loan is taken against the property itself, thus making it the bank’s property upon non-repayment of the loan.

Documentation

• NRIs can either come down to India and invest directly, or they can give power of attorney (POA) to someone to complete the transactions.

• Documents required include copies of passport, work permit, valid visa, salary certificate, permanent account number (PAN card), etc. There is a requirement for a local contact address as well as power of attorney in India, preferably a chartered accountant.

Taxes

• The tax rules applicable for NRIs are quite straightforward, with no tax being applicable for holding properties in India. However, if rent is being sourced from these properties, then it will be taxable.

• If any property is sold by any NRI, then tax will be imposed on the capital gains incurred. They should try and hold onto the property for at least three years to avoid having to pay short-term capital gain tax.

Property Management

• Property management is crucial. It is always wise to have a reliable person or organisation on the ground to consider the property’s well-being against fraudulent encroachments. Purchasing a home from a builder with their own property management services would be an advantage.