The domestic real estate sector has witnessed a dramatic increase in home-buying interest and consequently in investments by non-resident Indians (NRIs) in recent years. The outreach programme of the current government and administration and introduction of the RERA have influenced the sentiments of Indians and the people of Indian origin from across the globe. Add to this, the dream of retiring back home in India, now teeming with all possible comforts, a modern urban lifestyle, and great medical facilities, entertainment and travel options, and it is not difficult to see the prospect of buying a plush 2 BHK on Ghodbunder Road, Thane
NRIs are permitted (by the current guidelines) to buy residential and/or commercial properties in the country. For this purpose, they may apply and obtain home loans from banks, and home financing or other financial institutions. One of the important requirements that need to be fulfilled is the opening of a savings or a transaction account with one of the Indian banks. Most banks offer three categories of accounts that can be held by NRIs – Non-Residential External Accounts (NRE), Non-Resident Ordinary Account (NRO), and Foreign Currency Non-Resident (FCNR) Account. When one of these accounts is opened the NRI buyer becomes eligible to apply for a home loan or a loan for real estate investment in a commercial property.
Things to remember –
- With Digital India and Ease of Doing Business becoming the keywords of the Indian economy, much has changed for NRI investors looking for finance to invest in real estate. This application can be filled in and submitted online or at one of the lending bank’s overseas branches.
- If you are an NRI looking for financing options you will need to provide proof of residence (from the country you are currently living in) and will also need to furnish document attesting to your continued residence for a period of time. You will also need to furnish proof of steady income and all your Indian and overseas tax filings. Your passport and visa (if applicable) will also be required. Your Indian applicant (if any) will also need to furnish all necessary documents.
- Loan repayment is done through the NRE, NRO, or FCNR account that you have in India. This can be done in the form of inward remittances or foreign currency deposits made into the account or domestic currency deposits made by the co-owner of the property.
- NRI home and housing loan rates are often comparable with domestic rates and many of the same terms and conditions apply to NRIs as well.
The government of India has very specific guidelines regarding outward remittances of income received in India through rent or lease of property. It is important to be aware of these before you decide to invest in one of the housing projects in Thane or elsewhere. All income earned in India has tax implications as well. Similarly, the sale of property in India will attract a tax burden. If this sale is made after 3 years of purchase, the long-term capital gains tax burden can be offset by reinvesting in a different real estate property in India.
