Guidelines for NRIs to Invest in Real Estate

With the falling rupee value, non-residential (NRI) Indians are keen on making lucrative investments in the Indian realty sector. The real estate industry in the country is one of the strongest as it didn’t go into the negative even during the recent demonetization or GST implementation; this has provided hope for outside investors to invest in this cash cow for their own share of the goodies.


Aside from the investment point of view, a home back in India provides a safety net for many Indians as a potential retirement home. The best part is that as long as an NRI is also an Indian passport holder, there are no hurdles in purchasing residential or commercial properties and no prior permission needs to be taken from the government authorities. Restrictions only become applicable when an NRI wants to invest in agricultural land or a farmhouse; however, there are no issues with an NRI receiving the same as a gift or an inheritance.

The rules and regulations for property transactions by NRIs or PIOs (Person of Indian Origin) comes under the jurisdiction of FEMA (Foreign Exchange Management Act) which ensures that all payments are made in Indian rupees through legal banking channels using an NRI account.

When buying a property in India, NRIs need to be a little prudent as some realtors are into fraudulent activities and knowing that as an NRI you won’t always be around to check on your investment, can land in you in murky waters. To avoid such situations, here are a few guidelines on safer investment in real estate.

Builder credibility is the most important factor to weigh in on before making any commitments. You need to check the track record of the builder and his history of timely deliveries as well as providing all the amenities, fittings and appliances as mentioned in the contract. You will also need to make the effort to check if all the necessary building permissions, land ownership titles, licenses, etc, are in order so that the building isn’t later declared an illegal construction.

NRIs living outside India have been offered the option of giving the power of attorney (POA) to a resident Indian who can oversee the final stages of property purchase as well as its administration. This is safer for the concerned investment.

As an NRI, you are also eligible for the same tax benefits as resident Indians and investment of at least three years is recommended to avoid short-term capital gain tax. If the property is given out for rent, the income also becomes taxable.

As per RBI rules, just like other Indians, you are eligible for 80% bank loan for your purchase, the EMIs of which have to be remitted from an NRE account.

It’s best to hire a lawyer to ensure all legal aspects are covered.