NRI Investments in Indian Realty
With over $80 billion remitted to India by its NRI diaspora in year 2018, India continues to hold the top position among countries receiving remittances from abroad. Over $1 billion were remitted using comparison services like CompareRemit, the biggest money transfer aggregation platforms. This is close to 20% of the overall remittance market from the US alone. One of the reasons for this high ranking lies in the conveniences offered by the Indian Regulatory and Tax regulations coupled with the improved accountability of its Realty sector. Today NRI investments are treated with parity along with domestic investments and the ease of transaction has continued to support this upward trend.
The Indian Realty has always been a favored sector among NRI investors. Be it luxury residential properties or high rent-yielding commercial ones, most remittances to India have been towards real estate. A lack of information and standardized process coupled with a tedious legal system and delayed accountability in the past has been mitigated with Real Estate Regulatory Act (RERA), Goods & Services Tax (GST) and a dedicated appellate tribunal to resolve disputes.
Things to Know When Investing in Indian Real Estate
- Real estate investments by NRIs is regulated by the Reserve Bank of India through its Foreign Exchange Management Act (FEMA).
- The NRI can invest in both residential and commercial properties and make payments for both via remittances through standard banking channels.
- Remitting money, say from the US or other countries outside of India is the only option as traveler’s checks and foreign currency is not an acceptable mode of payment in India.
- A NRI can also acquire a property jointly with a non-resident spouse with the condition that they have been married and living together for a minimum of two years before purchasing the joint property.
- As a NRI, one is only taxed for income accrued or received in India. Thus, if one is to earn rental income from either of the residential or commercial properties he has to file for taxes on an annual basis despite his place of residence.
- Once the owner holds the property for over two years, he is eligible for long term capital gains. Else he only receives short term capital gains.
- The tax rate for long term capital gains is 20% with the added benefit of inflation adjustment. Short term capital gain, on the other hand doesn’t have the benefit of inflation based indexation on the cost of acquisition and the tax rate is higher at 30%.
Realty investments in India is on an upward rise and the ease in financial remittances across borders is facilitating this trend. If you are looking to buy property in India today, find the best exchange rates on CompareRemit.