When it comes to real estate, the Indian market seems to be flourishing every day. Be it duplex apartments, grand villas or luxurious homes, the plethora of choices has resulted in the rapid growth of NRI investments. It is an obvious fact that if you are thinking of a property investment, it will involve a huge amount of capital. This often results in certain stimulation of thoughts in the investor’s mind. Due to the lack of close proximity, the concerns also tend to be more. Property investment requires proper diligence as wrong decisions can lead to great losses. Listed below are some of the tips that you as an NRI need to keep in mind before deciding on purchasing a property:
- Know the rules
For an NRI who is interested in investing in India, the purchase falls under FEMA’s (Foreign Exchange Management Act) jurisdiction. The Reserve Bank of India (RBI) needs to be approached for approval. It is advisable that you have a detailed knowledge about the rules as well as the regulations related to property investments in India before starting to look for a property. There are certain properties like plantations, agricultural land or forests that cannot be owned by an NRI.
- Your purpose
Before making the investment, your purpose for the investment should be clear to you. It could be due to residential living, commercial use or for building a home where you opt to live post retirement. If it is only about the returns, you can purchase properties in developed areas and then rent it out.
- Do not rush with your decision
When investing in a property, ensure that you do not take a hasty decision. This is a decision which requires patience and extensive research. Make the time to check out a lot of properties, scrutinise and shortlist from them and after negotiating with your sellers, you can choose the one that provides you with the best deal.
- Your builder/developer must be reputed
If you are planning to build a home, it is very important for you to go for a thorough background check before deciding on the builder or the developer. It is only if you are sure that the builder has a reputation and can be relied on, that you must go ahead with your selection. If they have a past history of delaying projects or have not complied with the laws, it is better to avoid such associations.
- A personal visit
A property investment is a huge investment that you make. Hence, before making the purchase it is very important if you can personally visit the site that you have decided to purchase. In case it is not possible for you to make the visit, you can always ask a trusted family member or friend to do it for you.
- Check the location
For any real estate purchase, location turns out to be the most important aspect. If the location that you choose is closer to a better and proper infrastructure, it would definitely yield better and greater returns in the long term. A better location will ensure a better resale value in the future if you intend to sell it.
- Examine the legal aspects carefully
Your property’s legality is one of the major things that you must look in to before you give your confirmation for purchase. You should have a clear knowledge about the present owner, legal disputes of the past if any and the regulatory approvals that are required locally before you finalise the deal. All legal papers related to your property should be at your disposal.
- Understand the tax implications
At the time of your purchase, comprehend the country’s tax implications like property and rental taxes. Section 80C of our Income Tax Act allows an NRI to claim for a deduction of Rs. 1 lakh in taxes. You will have to pay a 1% TDS if the property is worth of 50 lakhs and more. If you plan to sell the property, a capital gain tax needs to be paid (as per the Income Tax Act). You can get benefits for long term if you hold your property for more than 3 years.
- Check your funds
Like a citizen of India, an NRI also has the option for getting a housing loan in the country. You would have to provide certain documents like your passport, work permit, valid visa, your employment contract, certificate of work experience, salary certificate and statements of your NRE or NRO account. Banks generally allows NRIs to take a loan up to 80% to 85% of the property value.
- Basic amenities
If you are planning to build a house, basic amenities should be easily accessible in your property like water, electricity, garbage disposal facilities and other basic infrastructure. That way you will not face any problems when you come with your family to visit the place. In case you wish to rent out the property, it will always be feasible if it includes the necessary amenities.
- Clear all your doubts
You must never hesitate to ask questions if you have a doubt related to anything before making the purchase. It is better to be clear than to land yourself in some unavoidable problem later.
- Managing the asset is also important
Once the construction is over, you also have to make sure that your asset is well maintained. You can approach some firms that may provide assistance to you in this regard. Apart from that, your good friends and families can also help you out to maintain your asset in the country while you are abroad.