What Are Crucial Tips For NRIs Investing In Indian Real Estate Market

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Home gt Blogs gt What are crucial tips for NRIs
investing in Indian Real Estate Market?
What Are Crucial Tips For NRIs Investing In
Indian Real Estate Market?
Dec 2017
In Realty Affairs
The fact actually remains that the realty rates
in the world are sinking. But, investment in real
estate sector in India is ringing. This is the
truth of the situation. To encash the reality,
non-resident Indians should think of investing in
the real estate sector in India. When it is said
that investment by Non-resident Indians is made
in present times in the realty sector, then
definitely it will be bringing in some
higher-appreciation in the previous years to come
and the investment that is made today will not
bring in any regrets. Before investing in the
real estate sector in India, the NRIs
specifically should actually take care of the
provisions which contained in Income-tax Act and
Foreign Exchange Management Act.
A genuine knowledge of the two enhancements will
certainly help the Non-resident Indians to take
the vast decision of the investment in the real
estate market keeping in mind the provisions of
the law that affects all such real estate
investment.
Also, according to Foreign Exchange Management
Act, an Indian citizen who lives outside India is
allowed to acquire any steady property in India
other than the plantation/agricultural property
or a farmhouse. Therefore, it is clear that the
non-resident Indians enjoy all privileges which
are enjoyed by the residents of India with the
reference to buying an immovable property in
India.
1. Obtain immovable property other than any
plantation property/agricultural land or a
farmhouse by the way of purchase of subject to
conditions concerning Reserve Bank of India rules
which are mentioned in clause (a) of the
regulation
2. Obtain any immovable property apart from
plantation property/ agricultural land/ farm
house by the way of gift from an Indian citizen
outside India or from the PIO
3. Obtain property by legacy or inheritance 4.
Transfer by the way of sale any of the
immovable property apart from plantation property
or agricultural land of a farmhouse by the way of
sale to the person resident in India. 5.
Transfer farmhouse/agricultural land or the
plantation property by way of gift or the sale to
ay Indian citizen which is a resident of India.
6. Transfer of commercial or residential property
in India by the way of gift to any person, a
resident of India or to a person who resides
outside India who is an Indian citizen or to a
person of the Indian origin who is resident
outside India. Before you make any investment in
the real estate sector, Non-resident Indian
should carefully prepare the purpose of making
any investment or the basic objective in the real
estate sector in India. The strategy will
certainly be different in case investment in the
real estate which is made for obtaining a
residential property for the self-use. Similarly,
the strategy for the investment will somewhat be
different in any situation where Non-resident
Indian would like to purchase the real estate
sector with the objective of making any money at
the time of property selling. Oppositely, the
strategy will be pretty different if the
Non-resident Indian who is keen to invest in the
real estate sector just with the prime objective
of getting a regular flow of money by way of the
rental income. Thus, the prime strategy with the
reference to the investment by non-resident
Indians in the real estate sector which would be
to choose some specific purpose as well as the
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objective of making the investment in the real
estate sector.
Purchase of property by NRI for
self-use Non-resident Indian can make the
investment in the housing property for his own
use. The property can be in form of numerous
ownership homes or it would be in form of buying
the piece of land as well as constructing the
house thereon. In both situations, it is the
advantage for the non-resident Indians to make
the investment in the housing self-occupied
property by taking the loan. Non-resident Indian
would be happy that he takes the self-occupied
loan on the home property, then enjoys reduction
from Indian income especially in respect to the
interest that's paid on the loan which is taken
for the self-occupied housing property. The loan
can be either taken from the financial
institution or the bank so that the loan can be
taken from the family members or relative or
friend. The ultimate deduction in respect of the
loan interest that is allowed for the
self-occupied home property is Re 1, 50,
000. Likewise, as per the provisions that are
contained in section 80C of Income-tax Act,
1961within the complete deduction of Rs 1 lakh,
Non-resident Indian such as Indian Resident would
enjoy the deduction in respect to the repayments
of residential loan for a property that is
self-occupied. The deduction, however, for the
repayment of loan would be the permissible in
respect to the loan that is taken from financial
institution, bank, etc., Thus, whenever
non-resident Indians contemplates buying a
housing property for self-use, the definitely the
best investment strategy is to take loan and make
the investment in your self-occupied residential
property. Real, estate investment for rental
income Non-resident Indian can make the
investment in the housing property or in the
commercial property with objectives of getting
the regular glow of the rental incomes. The
necessities of taxing rental income are pretty
simple, investor-friendly and easy. Broadly, from
rental income that is delivered by non-resident
Indian deduction is actually available to
repairs, collection and maintenance charges of
the property. This exclusive deduction is
permissible regardless of the fact that you spend
on repairs or you don't spend on the repairs.
Therefore, this is a huge deduction which is
available from the rental income which is
actually instrumental in cutting down tax
payments by the non-resident Indian on the rental
income. Another vital feature of the taxation
relates to the full deduction without the upper
limit of the paid interest by non-resident Indian
for buying property which is given on rent.
Hence, the complete interest payment for the
property purchase is given on the rent which is
allowed as the deduction from rental income. It
is a great huge advantage. Thus, it is worth for
non-resident Indian to make the investment
especially in the real estate sector that
acquired for receiving all the fixed flow of the
rental income by the loan for all such
purchases. Tax saver formula The objective of
non-resident Indians is to provide investment in
real estate with the prime objective of making
the money by selling like real estate than for
non-resident Indians, it is pretty strongly
suggested that they should not actually sell
their real estate at least with over three years
of the purchase of the real estate sector. To
provide the things pretty simple and clear it may
actually be noted that whenever property whether
the residential and commercial is sold by
non-resident Indian, then like resident
individual income-tax is payable on capital gains
receiving in selling the real estate. In case,
the property is sold for holding the minimum
period of over three years, in that particular
situation the capital gains ascending the
non-resident individuals is known for the
long-term capital gain. While reversely if real
estate is actually sold within the period of less
than over three years from the purchase date in
that particular situation with the profit arising
on the transaction is treated as the short-term
capital gain. Under the income-tax law, the
short-term capital gain is answerable to tax as
well as is to be added to the income of
non-resident Indian. In case, the property is
being sold after holding for three years, it
becomes the long-term capital gains with
innumerable tax advantages which can be achieved
by NRI. For instance, if the property is sold
after holding for three years, the advantage of
cost inflation index is actually made available
to non-resident Indian whereby the substantial
tax on the long-term capital gains can be
reduced. Also, the maximum income-tax is payable
in the long-term capital gains as just 20 and
lastly if the property is held for three years
then it is likely for non-resident Indian to save
capital gains tax by making the investment in
fresh residential property which is based in
provisions contained in the income-tax
law. Hence, it provides a sense for all the
non-resident Indians to buy the real estate in
India as well as sell similar after holding for
over 3 long years. These small activities if the
implemented by non-resident Indian, in reality,
will help these to survive a substantial amount
of income-tax on the long-term capital
gain. Repatriation of rental, income and saLe
proceeds of property Within the supplies of
Foreign Exchange Management Act as it is pretty
possible for the non-resident Indian to
repatriate rental income that is received from
the investment in real estate market in India.
Likewise, it is also possible within the
framework of Foreign Exchange Management Act to
repatriate proceeds of the sale of immovable
properties in India particularly in situations
where all these properties have been bought by
remittance from the abroad or from the NRE
account. Income-tax compliances Every time
non-resident Indian makes the investment in the
immovable property in India, he actually is not
required to comply with the formality of law.
Just by property, fulfill the registration
formalities as well as relax. It is advisable,
however, that non-resident Indian should get a
PAN card which is permanent account number card
so that the non-resident Indians have specific
income by the way of rental incomes from the
property in India, then it is easier to make the
tax compliances. Also, it is necessary to
remember that non-resident Indian should file the
income-tax returns in India in respect to the
rental income especially when the rental income
is coupled with any other income of non-resident
Indian arising in India which exceeds the basic
income-tax exclusion limit. For the advantage of
non-resident Indians, it may actually be noted
that for the present fiscal year, the basic
income-tax exemption limit for the single
taxpayers is Rs 1.8 lakh as well as for the women
taxpayers the similar is Rs 1.9 lakh while for
senior citizens of age of 60, the basic
income-tax exemption is Rs 2.5 lakh and then for
senior citizens who are the age group of 80 years
and above the income-tax which is exempted limit
which happens to be 5 lakh. Thus, non-resident
Indians should take utmost care to file the
income-tax returns especially if similar exceeds
the basic exemption
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limit. Mostly, the last date of filing any
income-tax return happens to be 32nd July for all
years. If non-resident Indians is having
considerable huge income by way of rental income,
in the situation with advance tax which must be
paid in advance during the financial year itself
which actually is to be calculated on the
assessed income of the financial year. Reverse
mortgage benefit for NRIs The basic concept of
the reverse mortgage which is pretty popular as
well as prevalent in the USA and other countries
of the world is now popular in India. Now, in
particular, the senior citizens can take the
benefit of the reverse mortgage with respect to
the real estate which is owned by them in India.
The amount is taken from bank consequent to the
reverse mortgage which is added as an income of
non-resident Indian. Hence, in old age, the
concept of reverse mortgage happens to the
wonderful of enjoying the property in India on
one hand and on other hand taking the money from
bank account consequent to the reverse mortgage
of the property. The importance of circle rate In
India, circle rate has actually been announced by
government especially in respect to the
properties in varied parts of India. At any
specific point of time, whenever the non-resident
Indian is interested to buy property in India, he
should take care to discover circle rare of
property and this is primarily as the fact that
stamp duty will be payable on least value of
circle rate or the actual rate whichever is
higher. Similarly, the circle rate importance is
to be noted when non-resident Indian is keen to
sell the property. In case, properties are sold
by non-resident Indian at a lower rate than
circle rate, in that particular situation
whatever is the circle rate, same is treated as
minimum sale price as well as the capital gain
will consequently be calculated. Lastly,
non-resident Indian while making the investment
in the real estate sector in India who would find
the decisions of making the investment in the
real estate market in India which is a rewarding
proposition as nowadays the problems are less,
tax provisions, tensions are less, innovative
vistas are present to save tax and repatriation
becomes simple and easy. Whenever new realty is
proposed to be bought by non-resident Indian, to
get optimum tax planning the non-residents should
establish the reason for buying the
property. Completely depending on the reason for
getting the real estate, the new realty
investment should be made in names of varied
family members while keeping view the tax angle.
While wishing all non-resident Indians, it is a
great time in wonderland for the investment in
the real estate in India. It clearly feels that
investment made by non-resident Indian in Indian
real estate which will be rewarding the
experience for these and would make these proud
owned by the real estate in India with genuine
rewarding experience on their investment.
n g
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