NRI Real Estate and Property Management Services in Chennai
A significant chunk of the real estate investors in India are NRIs. Let us evaluate the financial implications as well as the rules and regulations to determine whether NRI Real Estate Investment in India is profitable.
We are SMEs guiding NRIs for Real Estate Investment in India, more than 50% of our customers are NRI’s who have invested in our projects and seen good profitability on their investments. We participate in International real estate exhibitions in UAE & Singapore and we have regular investors from these countries.
What types of properties can NRIs buy?
NRIs can invest in both residential and commercial properties anywhere in India, but they are restricted from buying agricultural land, plantation, or farmland. However, if they receive such properties through inheritance or as a gift, they can own them. If you, had purchased such properties before you became an NRI, your ownership remains valid.
Should NRIs invest in Indian Real Estate?
Holding a tangible asset in India, no doubt gives an emotional connection to NRIs. Also, like most people in India, NRIs are oriented toward physical assets such as gold and real estate.
The Indian real estate market is largely unregulated, and the sector has been affected by large-scale frauds, litigations, defaults by builders, and ownership disputes, leaving even the resident investors in the lurch. The growth of the real estate sector has mostly been stagnant over the last couple of years, and the rentals have fallen in most Tier-1 cities.
There are plenty of upcoming real estate projects which target NRIs and promise a high return on investment. Many NRIs fall prey to such properties and end up buying multiple properties in India.
Though the entire process of buying and selling is rather smooth these days, you might not be easily able to repatriate the gains to your country of residence and enjoy the fruits of your investment because:
- Investments in multiple properties are allowed, but repatriation of sale proceeds can be done only for two properties.
- Amount of repatriation allowed is equal to the amount that is remitted from abroad for house purchase. This means that if you have bought a property in India from earnings abroad, on selling the same you can only repatriate the capital you invested and not the gains.
- Even if the property was bought with income arising in India, the repatriation is restricted to USD 1 million per financial year and you have to clear a lot of legal hurdles before you can enjoy the profit you made.
Also, unless there is a DTAA agreement between India and the country of your residence, you have to pay tax on the gains you have made or on the rental income, you have earned, in India as well as in the country of your residence. Many people choose to hire property managers who manage all their properties in India for a fee. However, the fees paid cannot be deducted to reduce the tax outgo.
Here We come preciously to solve your real estate problems:
- Marketing your property appropriately
- Identify the right buyers for your property
- Negotiate the best price for the property
- Support to solve above discussed problems
Tax implications for selling a property:
The tax liabilities for NRI selling property in India are as per the Foreign Exchange Management Act of India. According to this act, the main factors that contribute to the amount payable as tax are:
- The capital gains are determined by the date of sale of the property
- The value of the agreement is based on the profit gained
- Charges liable to the society
- Other pending loans
Repatriation of Indian property
NRI selling property in India is subjected to a list of generic terms and conditions while repatriating a property inherited from an Indian resident. Once these conditions are met, NRIs can go ahead with the process of repatriating the sale proceeds without the permission of the Reserve Bank of India. On the other hand, if the NRI has inherited the property from someone who is not of Indian origin, they will need to seek permission from the Central Bank.
Conclusion:
If you plan to return to India sometime shortly, it makes sense to buy a property for you to reside in. If you want to settle down abroad and have no intention of returning, investing in multiple properties in India makes no sense as you cannot enjoy the profits you make in the country of your residence. It makes sense to invest in other investments like mutual funds, direct equities, etc., where the liquidity is higher, the returns are better and the repatriation restrictions are less.
