The Ultimate Guide For NRIs Purchasing Residential Properties
The Indian real estate market is one of the most attractive markets for investment. Although the pandemic has put a brake on the breakneck speed of the industry, it remains a favourite destination with non-resident Indians worldwide.
Why Do You Need an NRI Home Loan?
An NRI home loan is the best way to fund the purchase of a residential property. You can use the NRI home loan calculator to get an estimate of the EMI and apply for the loan online. An NRI home loan offers you a host of benefits like low interest rates starting from 9.50%, minimal documentation, the easy application process, relaxed eligibility criteria, and an increased loan term of up to 15 years. Since India is one of the most lucrative destinations for property investments, NRI home loans are readily available with almost all reputed lenders.
Are There Any Restrictions in Buying Residential Properties in India?
The FEMA (Foreign Exchange Management Act) regulations state that any NRI or Person of Indian Origin (PIO) can invest in a residential or commercial property in India. They do not need to inform the RBI regarding the same. However, such relaxations are not applicable to agricultural land. Hence, you can either directly buy a residential property in India with an NRI home loan or give the Power of Attorney (POA) to someone who can execute the transaction on your behalf.
Do You Need Any Special Type of Bank Account?
While it’s true that an NRI home loan is easily available, and you can get an accurate estimate of your loan bills by using a calculator, you will require an FCNR, NRE, or NRO account in an Indian bank to carry out the transaction.
A Foreign Currency Non-Resident (FCNR) account enables you to transfer money in foreign currency, and you can use it only to create term deposits.
A Non-Resident Rupee Account (NRE) account allows you to deposit money in foreign currency and get it converted to Indian currency.
A Non-Resident Ordinary (NRO) account enables you to receive pension funds and dividend income in Indian currency.
What Documents Are Required For Residential Property Purchase?
When you wish to purchase a residential property in India with an NRI home loan, the lender will ask you to furnish the following documents:
- Application form and photograph
- Property papers, which may include the Title deed, Approved Plan, tax receipts, and building permit
- Proof of address
- Proof of Indian citizenship (Passport) and visa
- Proof of employment (Appointment Letter or Work Permit)
- Salary certificate
- 12-months’ bank account statement
- Income Tax statement
- Power of Attorney
Can You Get Tax Benefits on An NRI Home Loan?
When you avail an NRI home loan, you are eligible to claim the same tax deductions as any other Indian citizen. Generally, you can claim tax deductions on the principal component under Section 80C, and on the interest component, under Section 24(B). If you sell the property before three years from the date of purchase, the profit will be treated as short-term capital gain and will attract a higher tax than if you sell it after three years.
Conclusion
If you wish to invest in a property in India, the NRI home loan calculator should be your starting point. It will help you to figure out the amount you can comfortably pay every month. With an NRI home loan, house purchase can become ridiculously simple.
