A Step By Step Guide for NRI/PIO to Buy a Home in India
By living abroad you have worked very hard, saved up all your money, and are now looking for a good investment opportunity in your home country. Maybe you are moving back to India to live with your family and friends or you may just looking for a good investment, Whatever the reason might be, India has got all potential and hence it stands in the forefront of the world’s economy. The focus of this article is to helping you know the real estate in India better and make you one among the successful people.
For a non- agricultural land, Non-Resident Indians (NRIs) and Person of Indian Origin (PIOs) have no restrictions in buying a property. NRI’s are eligible to buy a property in India and PIOs are eligible to buy a property in India only if
- The person held an Indian passport
- Either of his/her parents or grandparents were Indian citizens
- HE/SHE gets married to an Indian citizen or a PIO
Before buying a property, get to know the purpose of the purchase. Are you buying a property in India to live with your family or you buying a property for your parents' back home or is it for investment purpose? Here is the checklist.
- Choose the right property developer
- Determine your budget
- Check property pricing
- Check for extra charges such as PLC, EDC, IDC, parking charges, club membership fees and maintenance charges.
- Check extra charges before possession like stamp duty charges, registration charges, legal fees, brokerage fees (if applicable), yearly taxes and more.
Next to decide the city or region where you want your house to be. In case if you are looking to buy a home in Chennai also consider the regions in and around south Chennai. Check the locality you have chosen has got a good infrastructure including connectivity to road, rail and air, good growth rate and employment opportunities and also on the quality of life the place will provide. In case if you want to go for future rentals house or above all the appreciation value the house location will play a major role.
Choose a reputed builder by doing a complete research about the builders reputation in the market. Check for ease of transaction, on time delivery of the project, quality of construction and amenities, security and other facilities. If you are going for a home loan, then ensure the bank is approving loans for the particular builder. There are builders who do homes with modern amenities so depending on your budget you can choose the builder. Just make sure your builder prices are not high when compared to the market price.
A valuable fact in buying a property in India is without leaving your country of residence. Rather, you can choose a power of attorney (POA) to someone in India and they can sign the papers in the time of property registration and possession.
- 10% to 15% booking amount of the base sale price can be paid through wire transfer or NRE/NRO accounts from any banks of India.
- There are 2 plans such as, down payment plan and linked plan;
- Down Payment Plan - Buyers pay 85% from total sale price within 30 to 60 days of booking and remaining 5% at closing.
- Linked Plan – Buyers can pay in instalments through different construction stages
- Option of paying the amount in USD cheques for NRI buyers.
- Banks offers home loans for NRIs including HDFC, Kotak, ICICI, State Bank of India, Citi and more.
- NRIs can buy up to two houses by way of a gift from an Indian citizen, provided gift tax has to be paid.
- The process of transferring funds from rental income and selling the property is ultimately the last step in buying a property in India while you are abroad.
- Currently, NRIs are allowed to return up to 1 million USD per person each year.
- If you do not have a PIO / ICO card, you can apply to the Embassy of India and you can get it within 7 days.
- Capital gains taxes are in effect at the time of sale and are considered long-term after 36 months of ownership and result in substantial tax reductions.
- It should be noted that if the tax is paid to India, the income is not taxable in the country of residence with proof of payment.
- Rental income must be added to the NRO account, managed by the Indian Bank. HSBC, Citi and others.
- Ask your property developer if he has a property management service to help you become the owner of the property.