How can NRI make the right Property Investment

Real-Estate market of India is in a thriving state. There are various factors contributing to this growth like the economic stability of the country, rise in per capita income, ease of business etc. Real Estate Regulation Act, 2016 too is having positive impact on the market. Another benefit of this economic upsurge is the increased investment in Real-Estate by the NRI investors. It is no secret that the NRI for the major investment in the real-estate sector of the country, and in recent times this investments have increased significantly. Investment in property includes a large sum of capital and is bound to make certain stimulation in the investor’s mind regarding the risk he/she is taking. And in the case of NRI, this risk tends to be more because of the distance. Thus, it is important to make investment decisions after due diligence as even a minor lapse of judgment can result in huge losses.

Below are certain points that a NRI must keep in mind while making a Property Investment:

  1. Knowledge of the Rules – The property purchase by a NRI falls under the jurisdiction of FEMA (Foreign Exchange Management Act) and an approval must be sought from the apex banking body, RBI for any transaction to take place. Thus, it is vital that a NRI has at the last basic knowledge about the prevalent rules and regulations governing the property in India. It will be easier for NRI to hire the services of a property lawyer, who will be in a better position to guide him through the process of Property Investment.
  2. Purpose of Investment – A NRI can have various reasons to invest in property in India, varying from economic reasons to personal. It is imperative to buy a property according to your requirement.
  3. Research the Property – Do not take hasty decisions. Get a Title Search done of the property to make sure that the property is not disputed. Also, run a background check of the builder/ developer to ensure their credibility in the sector. If you are not convinced at any point, it is better to not get associated with that project.
  4. Visit the Location – A personal visit is a foremost requirement before making a Property Investment. It is always easier to decide about a property, after having a close view of the location and the project. As it is often not possible for NRI to visit the location of property Investment, they should ask a trusted aid to do it for them.
  5. Examine the Legal Aspects – Have a look into the legal aspect of your property. Make sure the property meets the requisite norms laid down by the government authorities and has all the regulatory approvals. The NRI buyer must have the complete knowledge about the property, its owners, any liability attached to the property etc. The NRI should be in possession of all the requisite legal papers and information before finalising the purchase transaction.
  6. Understand the Tax Implications – The tax implication for NRI are different from the resident citizens. The NRI buyer must be privy to all the information regarding the taxes payable on the property investment. A NRI is allowed to claim deduction under section 80C of Income Tax Act up to Rs. 1,00,000. In case, the NRI wishes to sell the property, he is required to pay the capital gain tax.
  7. Home Loan – A NRI is entitled to a home loan like a citizen. A NRI can take a loan up to 80% or 85% of the property value.