5 Steps to consider if you are an NRI and plan to buy real estate in India
If you reside outside India and are looking for an investment opportunity in India, then you must look at the real estate sector. Investing in real estate in India is always a rewarding investment. Besides, the land regulations and laws also favor foreign investments in the real estate segment.
Considering the favorable financial and economic landscape, there are some critical points that you need to consider before making a final decision. Real estate investments are major life decisions and need careful prudence and judgments.
Analyze the Market
Like any other major investment, you must start with your research. You must have sound knowledge about the location, infrastructure quality in that location, connectivity, public welfare facilities, goodwill, reputation, and history of previous transactions. At the same time, do visit the property exhibitions conducted by government bodies or groups of real estate agents. These exhibitions also give a fair idea about finances and loan options. The more in-depth you go into research, the more well-informed decision you can make.
Types of Properties
An NRI can have as many properties as he wants under his name. This can include both commercial and residential properties. But make sure that you do not invest in any land that is used for farming or agriculture. Farming land can only be gifted to an NRI or acquired by inheritance. Before making an investment decision, decide on the purpose of the property, whether you want to stay, or rent it out, or sell it for building residential or commercial complexes.
Financial Planning
The next step is to plan a financial strategy. Since all the transactions in India would be conducted in Indian rupees, you need to have an NRO/NRE account with an authorized bank. This account would be used to issue post-dated cheques, ECS, and send money abroad from India. Also, remember, as per the government mandate, 20% of the investment amount must come from your income sources; the remaining 80% can be financed from other sources.
Power of Attorney
You need not be physically present in India to invest in a property. All you need to do is transfer the authority to another person by giving him/her a power of attorney. This individual is obliged to act on your behalf and has the power to lease, sell, or rent the land. At the same time, he has to take care of the bank obligations and all the legal issues. Thus, it would be best if you appointed a trusted individual as your power of attorney.
Tax Benefits
Just like any other Indian citizen, you can enjoy tax benefits under section 80C for your property investment. If you sell your land within three years, then it would be a short-term capital gain and would be duly taxable. But if you sell it after three years or reinvest the money, then it would come under long term capital gains.
Real Estate investment would open a plethora of opportunities in front of you. Even being an NRI, you can make the most of it, act smart, be prudent, and make the best investment decisions.