NRI buying property in India: full guide

Living Abroad Overseas property NRI buying property in India: full guide Gabriela Peratello 26.01.22 (updated more than 1 year ago) 4 minute read If you’re a NRI (non-resident Indian) or PIO (person of Indian origin) considering buying property in India from the USA, this guide is for you. We’ll cover all you need to know about buying a house in India, including the documents required for an NRI to buy property in India and how to arrange a power of attorney for an NRI to buy property in India without being in the country. To help you save money when buying properties in India from abroad we’ll also introduce Wise low cost international payments. Get the mid-market rates and low, transparent fees — and save 6x compared to using your regular bank. Learn more about Wise 📑 Table of Contents What types of immovable property can NRIs/PIOs buy?Procedure for NRI to buy property in IndiaNRIs buying property in India: financial aspects What types of immovable property can NRIs/PIOs buy? As an NRI buying property in India, you’re free to purchase most types of real estate. Residential and commercial properties are both approved for NRI and PIO purchases, as long as the process follows FEMA (Foreign Exchange Management Act) rules¹. The key exception is buying agricultural land, plantations and similar properties. In this case you’d need to seek extra permissions before buying, with approval granted on a case by case basis. This also means that NRIs and Green Card holders can’t buy agricultural properties, such as the farmhouses attached to agricultural land, without official permission. Can you continue owning land or property after becoming a non-resident? If you buy a property in India when you’re a resident there and subsequently leave the country, you’re entitled to hold onto the property — even if it’s agricultural land, and would otherwise not be available to purchase by an NRI. Procedure for NRI to buy property in India The steps you’ll take to buy property as an NRI are similar to those followed by residents in India — the main difference will be in the need to acquire power of attorney if you’re not already in the country. Get good local advice if you’re not in India yourself, to make sure you’re following all legal requirements when buying a property, and to avoid any unnecessary risk. 🎯 Here are the basic steps you’ll take Engage a local solicitor and notaryFind a realtor in the location you want to buy Arrange power of attorney if you’ll not be in India for the purchaseFind a property and agree a sale priceYour solicitor will complete due diligence checks and create a sale agreementSign the sale deed in person of via your representativeRegistration of the property purchase Documents required for NRI to buy property in India Here’s a rundown of the documents usually required when buying a property in India as an NRI: Passport — if you hold a non-Indian passport you’ll also need proof you’re an NRI such as a PIO or OCI (Overseas Citizen of India) card PAN (Permanent Account Number) cardPower of attorney if you’re not completing the transaction personallyProof of address and identity will be required when you register the purchase of the property Getting a power of attorney for NRI to buy property in India If you’re not able to travel to India to complete your property purchase personally, you can still buy property in India as an NRI by giving power of attorney (PoA) to a representative. This entitles your representative to act on your behalf in legal matters such as completing the property purchase. You can arrange power of attorney via your nearest Indian Embassy or Consulate. The process may vary slightly between locations, but you’ll usually need to have 2 witnesses available to sign your PoA and will need to provide your OCI/PIO card and recent passport sized photos². NRIs buying property in India: financial aspects Buying a property can be a great investment — but it’s also a big commitment. Let’s take a quick look at some financial considerations when buying a property in India. Getting a home loan in India as a NRI As an NRI you may be able to get a home loan in India. However, banks will set their own eligibility rules, so whether or not you’re allowed to take a mortgage may depend on the type, value and location of the property as well as how you intend to use it. It’s common for NRIs to be asked to provide a higher deposit amount compared to residents. The interest rates offered to NRIs may also be inferior to those given to residents of India. Documents required to get a NRI home loan If you’re entitled to get a home loan in India you’ll need to provide a suite of supporting documents. Exactly what is required will vary from bank to bank — but you can expect to be asked for: Your passport and PIO/OCI cardProof of legal status in your country of residenceEvidence of your income and any pre-existing debtsCredit score from your country of residence Paying for property in India as an NRI Whether you’re taking a home loan or buying your property outright, you’ll likely need to make a payment upfront when you close the deal. Under RBI rules you must pay for your property either through remitting a payment from overseas in INR, or from the balance held in your NRE/NRO or FCNR account. You can’t pay for a property in India by presenting foreign currency for example. Repatriation of funds from abroad If you sell your property in India you’ll be able to remit the funds overseas subject to RBI rules. To repatriate funds you’ll need to demonstrate you acquired the property under FEMA rules, and you’ll have to pay any relevant local taxes. If you’re selling more than 2 properties you may need to seek RBI approval before remitting funds¹. Send money abroad with a fast and secure Wise transfer If you’re paying for your property in India from abroad, choose Wise to save up to 6x compared to using your normal bank. Send money to India using just your laptop or mobile device, for a fast, secure and low cost international transfer which uses the mid-market rate every time. See how much you can save with Wise today. Tax implications for NRIs buying property in India When you buy a property in India you’ll be liable for several local taxes including stamp duty, registration fees and legal costs³. You may also need to pay a realtor’s fees, depending on how you’ve arranged the transaction. If you buy a property in India but retain your NRI status it’s likely that you’ll only need to pay income tax in India on income accrued in India⁴. If you change your status to become a tax resident in India your tax obligations will also change. In any case, it’s worth taking professional advice to make sure you’re fulfilling all tax requirements both in India and in your country of residence. Whether you’re buying a property in India to live in or as an investment, use this guide as a starting point to understand the process involved. And don’t forget to choose Wise when you send money to complete your property purchase in India to save 6x versus using your normal bank. Still not sure about Wise? Check the comparison table below Sources: RBI – FAQ Indian Embassy USA Global Property Guide – India buying guide Tax Summaries – Taxes on personal income Sources checked on 01.26.2022 *Please see terms of use and product availability for your region or visit Wise fees and pricing for the most up to date pricing and fee information.This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited or its subsidiaries and its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.We make no representations, warranties or guarantees, whether expressed or implied, that the content in the publication is accurate, complete or up to date. Money without borders Find out more Living Abroad Buying property in Japan as an American: Full guide Interested in buying property in Japan? Here’s everything you really need to know about buying property abroad as an American. Alexis Konovodoff 06.09.24 9 minute read Living Abroad Best countries to buy property as an American: 2024 guide Interested in foreign real estate? These are the best and easiest countries to buy property abroad as an American. Alexis Konovodoff 07.08.24 6 minute read Living Abroad Buying property in Dubai as a foreigner: US guide Interested in buying property in Dubai? Here’s everything you really need to know about buying property abroad as an American. Alexis Konovodoff 07.08.24 8 minute read Living Abroad Dubai mortgages and home loans for non-residents: US guide Find out what you need to know about getting an international mortgage or home loan in Dubai when buying property abroad as a non-resident. Alexis Konovodoff 07.08.24 5 minute read Living Abroad Buying property abroad as an American: What you need to know Thinking of buying a property abroad? Find out the legal requirements you need to know before buying a property overseas as an American. Alexis Konovodoff 01.08.24 6 minute read Living Abroad Buying property in Colombia as an American: Full guide Interested in buying property in Colombia? Here’s everything you really need to know about buying property abroad as an American. Alexis Konovodoff 01.08.24 8 minute read