• Real estate has become one of the most favored investment options for NRIs. Due to the revised real estate market regulations, anyone holding a valid Indian passport is now eligible to invest in Indian real estate, simplifying the process. The decline of the rupee and the regulatory changes brought on by reforms have encouraged a significant number of NRIs to participate in the Indian real estate market. Engaging in real estate investment is both secure and lucrative, with no limitations on the number of properties owned.
• With the Indian government’s initiative to regulate the real estate sector, fostering increased transparency and accountability, there has been a surge in NRI investments in the Indian real estate market.

Market Research and Advisory

• The choice to buy or sell a property should be primarily driven by comprehensive market research. However, this might not be practical for an NRI. Non-residents often base their opinions on secondary sources. Regardless of advice from friends and family, NRIs should consult qualified real estate professionals. It is advisable to consider issues such as tenancy agreements, repairs, ongoing maintenance, and the buy/sell decision in advance.
• A Real Estate Consultant offers a steady flow of market data, relevant advice, and an effective asset management support system that includes provisions for property insurance. Enrolling in these services can give NRIs peace of mind.

Valuation and risk assessment

The assessment and risk analysis of the property in question should not be overlooked prior to making a purchase decision. Assistance from a licensed real estate consultant will be necessary. NRIs must exercise vigilance and choose an appropriate property to mitigate the risks of delayed possession or even repossession. Despite these concerns, the Indian real estate market has expanded remarkably over the last decade. Investing in this sector will allow NRIs to stay connected to their heritage while generating profits. The risks are certainly plentiful, but implementing precautions and conducting necessary checks will ensure safety.

The Decisioning: Buy, sell or rent?

Should you acquire additional property, sell your existing one, or hold the asset and rent it out? NRIs aiming to capitalize on their real estate investment can opt to rent out or sell in order to purchase another property that promises greater returns. To arrive at the best decision, evaluate the rental yield and capital appreciation against the potential earnings from investing in an alternative property. This choice will result in a range of responsibilities, including, but not limited to, finding the right party to partner with and navigating extensive paperwork. Furthermore, each of these options will come with regulatory requirements established by the Indian government.

Tenancy Management

If you choose to lease your property, you will be responsible for managing your tenants. For an NRI, this can be difficult. To ensure your peace of mind, it is advisable to hire a professional service. The Consultant will ensure timely rent collection, maintain regular communication with tenants, handle safety and maintenance matters, and verify adherence to local tax regulations.

Legal assistance

Before making a purchase, it is essential to conduct thorough due diligence on the title, ownership, and occupancy of the property. When acquiring property, it is vital to confirm if the seller is the rightful legal owner of the property. By checking the title flow, one can follow the title history for the past 30 years. This can be confirmed by reviewing the property’s registered deeds/revenue records. A meticulous legal review of the property by a qualified legal advisor is necessary to assess any potential future risks or disputes.

Tax advisory

Income from the sale of residential property is taxed under the category ‘Capital Gains’ in Indian tax law, while rental income is taxed under ‘Income from House Property. ‘ NRIs qualify for the same tax benefits as domestic Indian buyers. If they sell the property within three years, the profits will be taxed as short-term capital gains. However, if the property is sold after three years, they can lower the long-term capital gains tax owed by acquiring another property.
Tax documentation needed will, however, require assistance with tax return filings, bookkeeping, audits, FATCA compliance, GAAP audits, contract drafting, among other tasks.

Conclusion

• A non-resident may purchase property for various reasons such as wanting a second home, having a backup asset, or maintaining a link to their home country. NRI investment in real estate has significantly increased over the past decade due to major changes in rules and regulations. When it comes to hiring real estate consultants, it is wise to do your research before seeking their assistance. Engaging with this help or service is as important as consulting property insurance experts you may encounter. Therefore, you should ask these firms if they can provide you with references from their current clients so you can get feedback on the quality of their services.

Disclaimer:

• The above information is for illustrative purposes only. For further details, please consult policy wordings and the prospectus before finalizing the sale.