Top 10 Tips for NRIs Investing in Indian Real Estate
There has been a steady rise in NRI investment in India even though the Indian real estate market is faced with turbulence lately. According to statistics, out of the inward remittance of USD 80 billion into India last year, over USD 13 billion was in the real estate sector. Factors such as the falling Rupee and uncertainty in other investment options have ensured that investing in real estate in India is a safe and lucrative option for NRIs. Although there are no restrictions, it is imperative that before venturing into making any such deals, the important rules for NRIs investing in Indian real estate are understood clearly.
Crucial Property Investment Tips for NRI Buyers
1. Do a thorough research and identify the best locations
Several areas gain prominence due to the rapid urbanization and quick developmental aspects. Places such as IT hubs have been turning important and are sought-after, as several IT organizations set shop around here. Such localities are not only gaining popularity but also experiencing unprecedented value appreciation. This makes them lucrative and attractive real estate destinations for NRIs. Looking for such locations is one of the significant tips for NRIs to know before investing in Indian real estate.
2. Find out what types of properties are available for investment
Although NRIs are having most of the privileges as enjoyed by the residential citizens of India, they are restricted from investing in certain specific types of properties. Following the right property investment tips for NRI buyers will allow them to zero in on the appropriate property. It facilitates avoiding plantations, farmhouses, and agricultural lands and opting for properties that have the potential of good value appreciation.
3. Choosing a reliable and reputed builder is imperative
When going in for apartments or commercial properties, picking the right builder who is credible and reliable is very important for NRI investors. It is, in fact, the most important point to be borne in mind as one of the tips for NRIs investing in the real estate sector in India. It helps to prevent unwanted situations later. NRIs may find it convenient to partner with reputed and honest builders who normally have all the essential certifications and clearances in place.
4. Loans are available
Normal banking channels in India are willing to assist NRIs with funding options through housing loans. This involves payment in Indian rupees, necessitating NRIs to open an NRE/NRO account. For this, they need to ensure that they maintain a good CIBIL score. It is to be noted here that for availing home loan from banks in India, NRIs need a resident Indian as a co-applicant. Issuing a power of attorney is also mandatory.
5. It is advisable and required to have a power of attorney
As NRIs may not be able to be present in person for the various processes and formalities, they are allowed to appoint their power of attorney to act on their behalf and represent them. NRIs opting for such legal procedures must identify the most reliable and honest person.
6. Get to know the tax implications
Purchasing and holding on to a property for three years before selling it entitles NRIs to avoid taxes related to capital gains. Similar to resident Indians, NRIs also can claim an income tax deduction for the interest amount on a home loan. There are differences in tax for self-occupied and leased out properties, and these details must be studied carefully while trying to invest in properties. Following NRI’s guide to investing in real estate in India is essential.
7. Make use of the real estate regulation and Development Act (RERA)
Now that RERA is in place, homebuyers, regardless of whether they are residing in India or NRIs, are protected from the misdeeds and offenses of builders. NRIs, when they invest in RERA-registered properties, may rest assured that the project will be completed in time, and they will receive all promised aspects such as amenities and carpet area. The Indian Government, through certain guidelines, provides tips for NRIs to know before making an investment in Indian real estate.
8. Being aware of Government policies is essential
As with other industries, the real estate sector in India is susceptible to frequent changes caused by governmental policies and regulations. It pays rich dividends to have a fairly good understanding of the policies associated with freehold, leasehold, and zoning areas while venturing to invest in real estate properties in India.
9. There is no restriction on the number of properties
There is no restriction on the number of properties that NRIs can invest in India. NRIs can buy as much real estate as they prefer. Only, they need to exercise caution about the type of tax liability they will be required to bear. There are no special permissions required for NRIs to invest in real estate property in India. If NRIs purchase more than one property, only one will be considered as bought for their own self. The other properties will fall under the category that is eligible for leasing purposes, making the rent received from them taxable.
10. Checking the legal documents and the title is important
NRIs looking for profitable and hassle-free investment options in real estate properties in India must apply due diligence in checking the legality of the property that they wish to invest in. Confirming the crucial details such as the property’s current owner, its history, and disputes, if any, is very important. So is checking the necessary approvals from the local regulatory bodies. This is mandatory before entering into any deal. It is one of the critical important rules for NRIs investing in Indian real estate.
India is touted to have one of the fastest-growing real estate markets in the whole world. With the capability to withstand any pressures and sustain even the recession on the global level, the Indian real estate market is a natural choice for NRIs to invest. Moreover, the regulations and laws prevailing in India are much more lenient, and allow NRIs to make any number of investments in the Indian real estate market. There’s no wonder that NRI real estate investment has been growing rapidly in India.