Even if it is easy for a non-residentIndian to buy a property in India, people often put their foot forward in the wrong direction. Knowing the rules can help you to avoid confusion when you decide to buy a property in this country. Right from obtaining an insight into the properties on which to invest money to the documents you may require, obtaining the funds to purchase the property, taxes you may need to pay following a property in this country, and the mechanism of ownership as it applies, the NRI customers have got to handle a lot while buying property in this country. The following points highlight hat NRI’s must remember for property investment in this country.
Table of Contents
● Type of property
Buying commercial or residential property in India is not complicated once you arrange the funds needed for this purpose. However, you must obtain special permission from the Reserve Bank of India if you want to buy a farm house, agricultural land, or plantation property.
● Purpose for the investment
To avoid getting into NRI land disputes, every individual must have clear and specific ideas in mind when it comes to the reason for buying the property. For instance, you might need a property for living during the post-retirement period. It can also be purchased for commercial or residential purposes. Some people may opt for properties located in the developed areas and rent it out depending on their needs.
● Documentation for buying property
For buying property in this country, you will need a valid passport, PAN card, recent photographs and an address proof. Be sure to arrange all of them before making a property deal in this country.
● Mode of payment
If you do not have money to fund the property deal in this country, the best approach is to go for a home loan as the RBI has now granted permission to the banks and the financial institutions registered with the National Housing Bank to offer loans to the non-resident Indians to buy residential property in this country. For one thing, the NRI’s must make the entire payment in the Indian currency. However, the funds offered by banks or financial institutions are not credited to the bank account of the NRI directly, but to the bank account of the developer or the seller. For repaying the loan, it is necessary to have n NRO or NRE account or FCNR deposits. Several banks offer the facility of opening Non-Resident Ordinary or Non-Resident External account. For those NRI’s wishing to make the entire payment at once without opting for the home loan can remit the amount through authorized channels located abroad or use the money present in their NRE/NRO or the FCNR deposits. In no way, can you utilize foreign currency or traveler’s check for making the payment against the property you have purchased. As NRI property disputes have increased in frequency, you must follow the right mode of payment to avoid the legal complexities.
● Avoid quick decisions
When it comes to property investment in this country, avoid going for a deal hastily. You must spend a lot of time and do extensive research before buying, and check a plethora of options before finalizing the deal. Try to screen every property with equal effectiveness, so that it becomes easy for you to negotiate with the sellers to make the deal that suits your budget and choice.
● Visit the property personally
A lot of people living abroad assign the work of property deals to their relatives instead of making the deal themselves. If your relatives are not trustworthy, and fail to visit the site of the property, the deal can go wrong. The best option is to visit the site personally instead of leaving the responsibility to the family members, so that you are satisfied with the property deal you make in this country. Try to find out about the NRI legal services in India to ensure that you have a place to resolve the property dispute incase you have already entered into a wrong deal.
● Screening the legal aspects
The legal aspect of the property you buy is a major thing you must inspect and check properly before giving the confirmation. If you are going for a resale option, you must have a clear discussion with the current owners of the property and know if there have been any legal issues in the past. Do not forget to check if you have to address the regulatory approvals before giving a nod to the deal. You must have all the legal papers at your end before buying the property.
● Joint ownership and tax
You can buy a property in your name or go for joint ownership while making the deal. However, you cannot have joint ownership of the property with a resident of this country or someone who is not liable to go for property investment. The tax system for resident and non-resident Indians varies. If the value of the property is above fifty lakhs, income tax at about one percent is to be deducted. On the other hand, while buying a property from another NRI, this rate is going to be higher. If the property is to be used by the buyer and purchased with home loan, the interest amount to be paid on the loan is to be deducted from the entire taxable income from the individual although there is a capping on that. When a property is purchased for rental income, the interest pain on the loan amount can be deducted, but there is no maximum limit.
Clearing all the doubts
For clarifying all the doubts related to property dispute you have to speak with NRI lawyers in India and get detailed information before the purchase. It is better to be sure about the legal aspects related to the land to avoid disputes later.