Being an NRI allows you to have the best of both worlds; being a global citizen and also enjoying the privileges provided to non-residents by our country. Along with these privileges comes the option to buy property, both in India, and your country of residence. In fact, a large number of real estate investors from India are NRIs. 

This comes as no surprise as investing in real estate has always been a very rewarding investment vehicle for NRIs. However, like any investment you need to be doubly sure about everything, including the tax implications and the legalities involved, and most importantly, whether investing in property is a good choice for YOU . 

As an NRI, here is a list of things you should know before you invest in real estate in India. 

• Types Of Property NRIs Can Invest In – Any Indian passport holder is eligible to buy property in India without the need for any special permissions from the government and at no additional cost. As an NRI you can hold as many properties in your name as you want to. This holds true for a Person of Indian Origin (PIO) as well. Commercial and residential properties can be purchased by NRIs, however, agricultural and farming land can only be gifted to an NRI or can be acquired in the form of inheritance. If you are about to purchase, acquire, or inherit any property, it is best to get in touch with a certified financial planner to help you get the most amount of tax and monetary benefits for your investment. 
• Indian And International Regulations – All Indian real estate investments made by NRIs fall under the purview of the Foreign Exchange Management Act (FEMA). Any transaction you make must be done through Indian banking channels only. Use your NRO/NRE account for any inward remittance. Post-dated cheques or ECS can also be used to make payments through your NRE, NRO, or FCNR accounts. You also have the option of taking up a home loan; the only restriction is that you can only pay it back in Indian rupees. 
• Advantages Of The Real Estate Sector – Over the last few years, the government has made numerous efforts to make property investments more transparent and consumer-friendly. There is a small list of documents that you should check before you make any investment in real estate in India. This includes everything from property verification documents, approval documents from the concerned regulatory and municipal authorities, and registration papers. There are strict laws to protect property owners from fraud and delays by builders and developers. You may also be eligible for tax benefits involved with making an investment in India. If your country of residence is one of the DTAA countries, you can even claim tax credit for your investments here and reduce your tax burden to a certain extent. 
• Power Of Attorney – You do not necessarily have to be physically present in India in order to make a property purchase. You can give the power of attorney to a trustworthy individual who can execute transactions on your behalf. The person who holds your power of attorney has the freedom to sell, lease out, handle legal issues, and honour bank commitments on behalf of you, the actual owner of the property. To make your property buying hassle-free, get in touch with a certified financial planner with experience in cross-border financial planning. 

Possible Drawbacks Of Investing In Indian Real Estate

As with any investment, when it comes to real estate, there are a host of things that may not be completely advantageous for everyone. For example, in case your country of residence has not signed the DTAA, you can’t claim any tax credits and may end up having to pay tax in India and in your country of residence as well. 

If the property that you purchase has a value exceeding INR 50 Lakhs, then you’ll have to pay withholding TDS at the rate of 1%. You can be exempt from paying this TDS only if this property is vacant and self-occupied. If you do lease out the property you will have to do so for a minimum period of 300 days or else you will have to pay the withholding TDS as applicable. Any property you buy after this first property will have a 1% withholding TDS on any amount exceeding INR 30 Lakh. 

Lastly, make sure you have factored in the monetary implications of making such an investment. Property investments often exceed crores of rupees and if you are taking up a property loan, you would be clearing EMIs for a fair amount of time. Review and revise your financial plan accordingly, keeping in mind important life milestones that you are going to reach in that period of time. If you want to understand the technicalities better, the best thing to do is to get in touch with a certified financial planner or wealth management firm with experience in handling offshore and NRI portfolios.