Investment on real estate needs a lot of knowledge and also the person is supposed to keep a close eye on all the recent developments in the same. For an NRI, investing on real estate is really a difficult task to deal and also to handle.
A very common question that emerges in the situation is that, ‘Can NRIs legally invest in Indian real estate? If so, what should I keep in mind while investing?’
Well, the answer to this is that yes, NRIs with a valid Indian passport can invest in the Indian realty market, though there are a few restrictions. NRIs with a valid Indian passport need no prior approval unless they are citizens of some neighbouring countries like Pakistan, Bangladesh, Sri Lanka, Iran, Nepal, Bhutan, Afghanistan or China.
NRI can buy as many properties (residential or commercial) as they want but are not allowed to buy agricultural land, plantation properties and farmhouses unless such properties are gifted to or inherited by them.
So, this is very much clear that apart from the agricultural land or plantation properties NRI can buy as many properties as the wish in India. There is no restriction for them in buying only residential or commercial land as they can go for the both.
A very important thing that has to be kept in consideration is that transactions must be done in Indian rupees through regular banking channels via an existing NRI account. Just like Indian citizens, NRIs can also avail of home loans to purchase a property, with the maximum loan amount generally being 80% of the property value.
Finally, the RBI doesn’t impose any rule for immovable property which is inherited or gifted. So, if you are an NRI and wish to grab a land piece here then it is not as complicated as earlier because now you can also get the easy bank loans for the same.
NRIs can lease or rent such properties without any restrictions. But it is required that the NRI should hire a reputed lawyer to vet all property documents. It is important to verify the original title deed documents and ensure that the property title is in the name of the seller.
Do a thorough check to ensure the seller has cleared all the dues related to the property. Verify that the seller has not diluted the right to transfer the property to a buyer, and cross-check if the property is built on agricultural land without requisite government permissions as an NRI may get into legal problems in such transactions. In the case of under-construction properties, an NRI has to give a power of attorney to the developer or a trusted associate.
What Kind of Property is A Good Option for Investment in India for an NRI at Present?
Well, investment on property is considered to be one amongst the crucial one and therefore the person who is investing his property is always supposed to learn about the things well. A very common question by the NRI’s planning to invest in Indian real estate is that, what kind of property is a good option for investment for them.
For a long time, the return on investments on residential assets had been rewarding considering the significant capital appreciation while the rental yields have always been low. However, during the last couple of years, due to a slowdown, capital appreciation has not been as per most investors’ expectations.
In the current market conditions, NRIs can consider investing in commercial properties which offer good rental yields as well as capital appreciation. There is a continuous rise in demand for Grade ‘A’ commercial spaces, especially in the wake of the massive demand for such assets and the probability of REITs hitting the market soon. Apart from Grade ‘A’ offices, you can also consider IT parks and logistics centres, which are typically yielding very healthy returns on investments.
To learn more about NRI tax services, tax laws and rights of the NRI’s for investments in India, you can contact a trustworthy NRI tax service company that could aid you in meeting up with the desire at the positive result.
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