How Many Properties Can NRI Own In India

Understanding the Basics of NRI Property Ownership in India

India allows NRIs to invest in its real estate sector under certain guidelines laid out by the Foreign Exchange Management Act (FEMA), 1999. These regulations provide clarity on the types of property an NRI can own, the number of properties allowed, and the process of purchase.

What Type of Property Can NRIs Buy in India?

NRIs that are planning to buy a property in India are allowed to purchase residential properties as well as commercial properties.

Residential Properties: This includes apartments, villas, bungalows, and plots earmarked for residential use.

Commercial Properties: Office spaces, retail shops, and warehouses.

Is There A Limit On The Number Of Properties NRIs Can Own In India?

There is no restriction on the number of residential or commercial properties NRIs can own in India. Whether you’re planning to invest in multiple properties in a metropolitan city or own a mix of residential and commercial spaces, Indian Laws allow all NRIs to own as many properties as they wish provided they adhere to FEMA regulations.

It is important to know that:

• NRIs must ensure that all transactions are conducted through proper banking channels in India, preferably through an NRE (Non-Resident External) or NRO (Non-Resident Ordinary) account.
• Taxes, registration fees and other levies apply uniformly, regardless of the number of properties owned.

Steps for NRIs to Buy a Property In India

NRI buying a property in India has to follow a correct procedure and demands a proper understanding to invest in Indian real estate.

1.To be aware of the eligibility criteria and restrictions

Before making a property investment, ensure you meet the eligibility criteria. Determine whether the property you wish to purchase is residential or commercial, as these are the types of properties NRIs are permitted to buy. However, it’s important to note that purchasing agricultural land, farmhouses, or plantation properties is restricted for NRIs.

2. Due Diligence

Once the identification of the property is done, it would be beneficial to have a reliable agent and legal advisor to ensure that the property is free from encumbrances and the documentation process is smooth. This should also include being well versed with the property due diligence exercise including verifying property titles, legal clearances, and builder’s reputation.

3. Arranging the necessary documents

• Valid Indian passport or Overseas Citizen of India (OCI) card.
• PAN card for taxation purposes.
• Proof of address in India and abroad.
• Income proof and evidence of any pre-existing debts if any.

4. Secure Funds

Ensure funds for the purchase are routed through an NRE, NRO, or Foreign Currency Non-Resident (FCNR) account. NRIs can also avail of home loans from Indian financial institutions for residential property purchases.

5. Registration of the Property

Once you finalize the property, it must be registered in your name with the local sub-registrar.

6. POA

If you are unable to be physically present in India to sign transfer documents and complete other formalities, you might consider appointing a Power of Attorney (PoA) to an Indian resident.

Benefits for NRIs Buying a Property in India

India’s real estate market offers numerous advantages for NRIs seeking to invest in property. From emotional ties to profitable financial returns, the benefits of owning property in India extend beyond mere ownership.

1. No Cap on the Number of Properties

India imposes no restrictions on the number of residential or commercial properties an NRI can own. This allows them to diversify their investment portfolio across cities or property types.

2. Favorable Exchange Rates

With many global currencies holding higher value against the Indian Rupee, NRIs often benefit from favorable exchange rates. This allows them to acquire premium properties in India at relatively lower costs when converted to their native currency.

3. Emotional and Cultural Connection

For many NRIs, owning property in India is a way to stay connected to their homeland. It offers a sense of belonging and serves as a base for visits or retirement plans.

4. Ease of Financing

Indian banks and financial institutions offer attractive home loan options for NRIs. These loans can be repaid in Indian Rupees, making it easier for NRIs to finance their property purchase.

5. Tax Benefits

NRIs can claim tax deductions under Section 80C of the Income Tax Act for home loan principal repayment and under Section 24 for interest payments on loans. These benefits reduce the overall cost of ownership.

6. Enhanced Transparency in the Real Estate Sector

With the introduction of the Real Estate (Regulation and Development) Act (RERA), the Indian real estate market has become more transparent and buyer-friendly. RERA ensures:

• Timely delivery of projects.
• Protection against fraud.
• Greater accountability for developers.

7. Inheritance and Legacy Planning

Investing in property in India allows NRIs to build a legacy for their future generations. Properties in prime locations are likely to retain their value and serve as a significant asset.

8. Government Initiatives Encouraging NRI Investments

The Indian government has introduced several measures to encourage NRI investments in real estate, including:

• Streamlined procedures for property purchase.
• Liberalized FEMA regulations.
• Infrastructure and development projects aimed at increasing property value.

Restrictions on property ownership for NRIs in India

While NRIs enjoy almost equal rights as Indian residents when it comes to buying residential and commercial properties, there are a few restrictions:
Agricultural Land, Farmhouses, and Plantation Properties: NRIs cannot purchase these unless they inherit them or obtain specific permissions from the Reserve Bank of India (RBI).

Key Considerations and Regulations

• Payment: The purchase amount must be paid in Indian Rupees through normal banking channels or through NRI bank accounts.
• Repatriation of Rental Income: Rental income can be repatriated to the NRI’s country of residence, subject to certain conditions and tax implications.
• Inheritance: NRIs can inherit property in India, including agricultural land. However, they cannot directly purchase such land.
• Joint Ownership: NRIs can jointly own property with other NRIs or Indian citizens.
• Legal and Tax Implications: It’s crucial to consult with legal and tax experts to understand the specific regulations and potential tax implications.

TAX Implications for NRIs Buying Property in India

Owning multiple properties in India comes with certain tax obligations:

1. Tax on Rental Income

If you rent out your property, the rental income is taxable in India. You can, however, claim deductions for municipal taxes, standard maintenance, and interest on home loans.

2. Capital Gains Tax

Short-term Capital Gains (STCG): If you sell the property within two years of purchase, the gains are added to your income and taxed accordingly.

Long-term Capital Gains (LTCG): For properties held for more than two years, LTCG is taxed at 20% after indexation benefits.

3. Wealth Tax

While the wealth tax was abolished in 2015, owning multiple high-value properties may still attract scrutiny under other tax provisions.

4. TDS on Sale

When an NRI sells property, the buyer must deduct TDS (Tax Deducted at Source) at 20% for LTCG or as per the applicable rate for STCG.

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