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The homesickness tends to attract non-residents in their native country. Their nostalgia compels them to plan for shifting here again after retirement. At that point, they often sweat out.
Reason?
Many factors are responsible for it. So far, there are a few massive obstacles that can trap you (if you’re the NRI) up. Let’s share a few vital points that are significant from your aspect if you’re planning to invest in the real estate in India.
I’ll begin with what FEMA states.
What FEMA says?
The Foreign Exchange Management Act (FEMA) is the licit regulation that states the rules & guidelines for the expats. The real estate investment of the NRIs comes within its index. This regulatory act is governed by the Reserve Bank of India (RBI). It’s basically drafted to pat the foreign investment in this sector.
This Act subtly reads that the PIOs/OCIs/NRIs own right to purchase a piece of land or any property here. This is permissible provided that the land or property must not be an agricultural land or a farm house. Moreover, they can invest in any commercial land.
However, if anyone is a blue blood, the property can be any immovable or movable one.
What about the loan availability for NRIs?
The expat with an Indian passport, mostly, have foreign currency. So, they intend to transact in that currency. But, the regulatory Act denies such kind of permission. Only Indian currency is valid for making this kind of deal. Also, the conduit must be an Indian bank, like PNB or SBI. They must have their account in any of these banks.
As far as the loan is concerned, you as the NRI/PIO/OCI can owe it if you get a green signal in paperwork. Many real-estate companies attract foreign clients to transact in the residential or commercial land/property. The investor must make sure that all your payments towards inward remittance should be through NRE/NRO account.
Moreover, they offer loan availability as well. So, if you’re on a shoestring, you can dream of a house of your own. To enjoy this loan facility, you should have at least 20% of the total value of the property. It means that you can get around 80% of the loan from any reliable source.
What if you’ll not be physically present to deal?
The physical unavailability can be answered through Power of Attorney (PoA). It defines that it’s ok if you can’t be present at the deal. You can go a round of discussion with your lawyer. Thereafter, it won’t be a big deal to empower the third party (like your lawyer or relative or builder or a trusted associate) with the PoA.
Drill in your head that it’s an extremely sensitive issue. You can lose your hard-earned money into the hands of any fraud. So, make sure that the chosen attorney would be reliable and trustworthy.
What are the tax benefits for the non-residents?
The Section 80C of the Income Tax Act, 1961 clearly defines that the foreign resident with Indian passport can claim for the tax deduction. It’s available upto 1 Lakh. But the Act has two provisions:
- The property sold within 3 years of its purchase
- The property sold after 3 years of its purchase
The first case would be termed as a short term capital gain. If you’ve earned any rental income in this case, it would be taxable. The second case would define as a long term capital gain. In this case, the expat can utilize his money by investing in another property.
