NRIs: Things you Should Know Before Buying a House in India

NRI Property

After living abroad for a few or many years, the logical thing that most NRIs want to do is invest in a property. It makes perfect sense to be thinking of getting back to India and having a home to go back to. However, there are some aspects that people living abroad should thoroughly research and think through before taking such a step. Summarized below are the top five things –

Home Loans

There are many financing options for Indians abroad to fund their property purchase. Home loans are the most common option for the bulk of the payment. However, NRIs are only eligible for a home loan amount of up to 80% of the house cost, and they have to fund the balance themselves. This remittance can be done through usual banking channels via the NRO/NRE or the FCNR accounts. Another option is to take a foreign currency loan from their “home” country (where they reside currently), but there could be considerable foreign exchange risks. People need to be even more careful if the building is under construction and the payment is to be made in tranches, based on the completion of work.

Property Registration

People should determine the ownership pattern in advance lest they want to be tied up in numerous litigations once they set foot back in the country. Additionally, keeping in mind the health and safety factor, it is always advisable to have the property under two/joint names instead of a single name (not advisable from estate planning perspective). Also, one should decide whose name is to come first (for tax liabilities and eligible deductions).

Income taxes applicable

An NRI is liable to pay the registration fee and stamp duty towards purchasing a house. He/she is also eligible for all the benefits that resident Indians get on the interest paid towards a home loan. In case the property has been rented out/leased, then the income they receive is deemed as “Income from House Property” and it is taxed according to the usual tax slabs in India.

Documents

NRIs should make sure that the seller has the authority to sell the same in case he does not own it. The No Due certificate should also be produced by the seller which stipulates that there are no outstanding civic/water/electricity dues at the time of sale. The property should also have all the necessary permits and approvals from the concerned civic authority of that city with regard to layout and construction. The house should also not be under any sort of litigations.

Other miscellaneous costs

NRIs need to know that the purchase price is not the only money that they will be shelling out from their pocket. Other hidden costs such as mortgage fees, inspection fees, legal fees, brokerage, and stamp duty also need to be factored into their calculations, lest there are any unpleasant surprises later.

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by Balaji R via Visakhapatnam, Vizag | Apartments, Flats, Homes, Houses, Plots, Property, Properties, Real Estate, Villas | for Sale | Shriram Panorama Hills