Why Invest in Real Estate? With limited availability of land, increasing...
The Indian real estate industry is expected to grow to a $650 billion business by 2025. This also suggests that the real estate investment India sector’s GDP contribution will more than quadruple, growing from 7% to 13%. The Indian government’s goal of providing houses for everyone by 2022 is also to assist this development. Despite hurdles such as legal changes and liquidity limits, most NRIs continue to engage in Mumbai real estate.
An NRI is an Indian who resides outside India more than 180 days a year, according to the Indian government. It is projected that there are 2.84 million NRIs in total. Millionaires account for 2.36 lakh persons, or little less than 10% of the population. A wealthy NRI’s net worth is $3.83 million on average.
The US has 1,33,564 millionaires, accounting for 56.5 percent of all NRI millionaires globally. The United Kingdom accounts for 12.7 percent of NRI millionaires, with the remainder distributed among the United Arab Emirates, Canada, Singapore, Hong Kong, Indonesia, and Japan. This NRI’s total fortune is estimated to reach $1.4 trillion by 2019. To put this in context, India’s GDP in 2018 was around US $2.72 trillion. NRIs must first create an NRE account, such as the HDFC Bank NRE Savings Account, in order to do business in India.
Understanding the financial whys and hows of investing in Indian real estate is the most significant part for an NRI or OCI. It is critical to determine their financial status and how to proceed with the purchase. With this in mind, it is crucial to remember that since all transactions are conducted in Indian rupees, the investor should consider currency movements and inflation rates across all currencies. This would be useful in establishing the investment’s true value.
For any citizen residing abroad, the first step should be to get a Permanent Account Number (PAN), which serves as a form of national identity. All financial transactions in India need this. Budget changes in India that will impact NRI investments They may be found right here.
Here are a few things to think about when purchasing property in India:
A significant study is required before investing large sums of money in overseas property, like with other high-risk activities. Sites with strong infrastructure, the goodwill and reputation of the property developers, and the history of similar developments should all be considered. It is good to evaluate property exhibitions in your area held by organizations like Griha Pravesh and the Confederation of Real Estate Developers Association of India (CREDAI), which regularly organize exhibitions for NRIs where various investment options, property styles, and spot loans from top banks are advertised. Simple investing choices, as well as a decrease in down payment value, are also accessible. This, combined with online study, is a good approach to preparing for this purchase.
Following the declaration by the Indian government that Persons of Indian Origin (PIOs) and Overseas Citizens of India (OCIs) will be merged, an OCI may now own property in India. He may buy both residential and commercial properties, as long as they do not include agricultural land, plantation property, or farmhouses. You have greater liberty with an Indian passport, and real estate transactions are overseen by the Overseas Exchange Management Act (FEMA), which supports all forms of overseas ventures.
Reputed Developers are your best bet, as their past projects tend to be in great condition. Also, they are a lot more reliable because of their visibility in the market and would be able to expose you to the best properties in the market.
Once you’ve decided on a property to buy, be sure you have the necessary finances set up. Select a project that has been authorised by a national bank, since the bank will have performed due diligence on the builder and the project before authorising it. A housing loan from such a bank would guarantee that cash would be distributed in phases and that the loan would be pre-approved. According to the Reserve Bank of India, an NRI buyer must pay a minimum of 20% of the property’s worth in cash. Local financial institutions may be able to fund the remaining 80% or less.
When buying a residence, an NRI may be entitled to the same tax advantages as an Indian citizen. Under Section 80 C of the Income Tax Act of 1961, he is entitled to a deduction of Rs.1 lakh. When you sell a property within three years after buying it, you have a short-term capital gain, and the profits are taxed. If you sell it after three years, you may invest in another property to reduce your long-term capital gains tax. Finally, if the property is intended for rental, the NRI must pay local taxes on the profit.
When you’ve decided on a house, be sure you’ve saved enough money. The Reserve Bank of India requires that the NRI buyer pay down at least 20% of the property’s worth in cash. Loans from local financial institutions might fund the remaining 80% or so.
The changing post-pandemic landscape for real estate prices and home loan interest rates invites NRIs to study viable possibilities in India. A word of caution: for under-construction projects, stick to reputed builders.
Yes, NRIs can invest in Indian real estate, subject to certain guidelines and regulations.
NRIs are permitted to buy residential or commercial properties in India. However, they are not allowed to own agricultural land or farmhouses in India.
The best investment for NRIs depends on their financial goals and risk appetite, but real estate is commonly considered a potential option.
If an NRI purchases an immovable property in India from a resident, he must deduct 1% TDS if the purchase price exceeds Rs 50 lakh. TDS should be deducted at 20% if an NRI purchases a property from a non-resident and long-term capital gains (LTCG) are applicable. In case short-term capital gains are applicable, TDS at 30% should be deducted.
Yes, if you sell a property in India as an NRI, the buyer deducts 20% as Long Term Capital Gains Tax (LTCGT) or properties sold after two years. For homes sold during the first two years, the TDS rate is 30%, which is deducted as Short Term Capital Gains Tax.
