What You Need to Know About NRI Investments in Indian Residential Properties
May 5, 2021
There still exists a lot of ambiguity on why NRIs must invest in India’s real estate market, what makes it a fruitful investment and several other questions like such that are usually misapprehended. Let’s take a look at the most commonly asked questions on NRI investments in India.
What are the benefits of NRI investments in India?
Here are the top 3 reasons that make investing in Indian real estate a lucrative choice for NRIs:
- Since there is no cap on the number of properties one can purchase, NRIs have the advantage of investing in as many residential and commercial properties in India, and earn rental income on them.
- These investments offer high returns on a low initial capital investment.
- There is also an advantage of claiming tax deductions on the income received on property investments in India.
How can NRIs keep a tab on their investment?
Delay in completion of real estate projects has been a longstanding concern in the Indian market which usually results in one’s capital getting stuck for years. However, now with RERA in place, a real estate developer is expected to allot 70% of the capital money collected for a project in an escrow account, which is eventually released as the construction of the project progresses. The transparency of funds used is one of the biggest factors that builds trust for NRI investment options in India.
What is the tax treatment on the gains made from real estate investments?
Any rental received from property investment in India is considered as income accrued in India and is taxable, regardless of the residential status of the person. One can earn rental income from the investment as well as short-term and long-term capital gains. After a standard deduction of 30% TDS from rent payments, the remaining is added to the total income and is then taxed on normal rates.
As for capital gains, if the NRI sells his/her property within two years of its purchase, the profits earned on that sale are considered short-term capital gains, and will be taxed as per the slab rate applicable for it. On the other hand, if the property is kept for more than two years, the benefit will be long-term capital gains, which will get taxed at 20% post indexation.
Home Loans for NRIs
Now is a good time to buy a house if you intend to get it on a home loan, as the interest rates are at a remarkable low of 6.5% in some banks. A loan of up to 80% of the property value can be availed for any real estate purchase. The banks allow a loan repayment tenure of up to 30 years, however, the loan amount depends on the individual borrower’s profile.
Where should one start looking for investment options?
It is recommended to purchase a property directly from a trusted and reputed real estate developer, as opposed to transacting through any middlemen. This ensures transparency in the process, which is an integral factor for any investment, especially for NRIs. A trusted builder spends years establishing his name and earning goodwill, which ensures no capital mismanagement takes place.
For anyone on the lookout for beautiful homes to invest in must check out the luxurious residences, villas and plots by Casagrand developers in Chennai and Bangalore. Not only do these homes offer value and high returns on investment, but also the prestige of owning a Casagrand property, builders of 112+ landmark projects across South India.