Buying and Selling Property in India

by Gloria Philips Expert Blogger

Most of the Indian living overseas make real estate investments back in India.They constantly seek out for the legal advice from expert legal advisor on buying and managing property in India. We have tried to answer the most common question they have with some key facts and limitations:

Can an NRI buy/invest in real estate in India?

An NRI can buy/invest in real estate in India, except for agricultural land/farmhouses/plantations or land. There is no border to the number of commercial or residential properties an NRI can buy.

How can an NRI invest/buy real estate in India?

Indian origin NRIs

According to Section 31 of the Foreign Exchange Regulation Act (FERA), foreigners can invest in two ways:

a. Foreign currency investment from abroad.

b. The local capital in INR.

Non-Indian origin NRIs

The NRIs of non-Indian origin can invest in real estate, though

a. The property is purchased for residential use only

b. The purchase amount must be done from foreign exchange sent from abroad through certain banking channels.

c. Income from the property may not be transferred outside of India.

In what type of property can an NRI invest/buy?

An NRI can invest or buy any number of:

• Residential estate

• Commercial estate

Except for agricultural land/farmhouses/plantations

The investor does not have to obtain any special permission from RBI. He also does not require sending any communication about such investment to RBI.

Can an NRI acquire Indian property from Indians?

An NRI can receive the Indian property of Indians only through:

• Inheritance:

The Reserve Bank has allowed the NRIs to acquire Indian property through inheritance.

• Gifts:

The NRIs can acquire property as gifts from their relatives. You can get not only residential or commercial properties but also receive agricultural land/farmhouses/plantations property or land.

Who can inherit the property?

Any foreign citizen can inherit Indian property, even if he has not visited India

NRIs can inherit not only private and commercial real estate but also agricultural, agricultural or plantation properties.

Claim Inheritance in India

• The only exception is this

The NRIs of most countries can inherit property in India without permission from RBI. However, the citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan must obtain permission from the Reserve Bank of India.

Can an NRI rent its property in India, if not in use?

The Reserve Bank of India has given the permission to the NRIs to rent the property in India.

Let us also answer the following:

What are the benefits of NRIs buying property in India now?

For an NRI buying property in India, there are several advantages. Some of them are:

• Real exchange rate

• Easier availability of loans for NRIs to buy real estate, transform and repair the asset

• Excellent source of income from rentals


What kind of tax is levied when a property is inherited?


By law, there is no tax in the case of inheritance in India.

• If a person occupies more than one property, according to the Indian tax rules, only one of the property can be claimed as self-occupied.

• The second property in such a case cannot be claimed as self-occupied, even if the owner retains the property for their use. Regardless of whether you rent the second property or not, it is assumed to be given on the rent. In this case, the rent has to be calculated according to certain valuations, and the owner has to pay tax on this deemed rental income.

Saving taxes on rental income

• 1/3 of the rent can be deducted as maintenance

• Saving taxes on rental income

• 30% of the rental income can be claimed as maintenance

• Paid property taxes can be claimed as a deduction

• Interest paid on property loans can be claimed

Save taxes on your second property

For the second property, you may be able to claim full interest paid for the EMI of the second house.

Under the tax laws, you can claim full deductions for the amount paid as interest on the loan for the second house, while for the first house you can claim up to 1.5 lakh Rupees in interest, but for your second home you can claim the full amount of interest. EMI refers to the Equity Monthly Instalment payment and includes principal and interest.

As a generalisation, all this information helps in deciding on the preferences and policies related to buying property in India. For more knowledge contact us to speak with one of our team expert lawyers for legal advice.

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About Gloria Philips Senior   Expert Blogger

285 connections, 9 recommendations, 911 honor points.
Joined APSense since, October 12th, 2013, From Newry, United Kingdom.

Created on May 1st 2018 08:17. Viewed 1,871 times.


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