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Reasons To Invest on Property - A Dreamz Infra Review
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The rupee is down about 7% since a year ago and by around 39% since five years ago, which makes it cheaper for people earning in dollars and spending in rupees. India received the highest amount of remittance at $69 billion in 2012 among all countries, according to the World Bank.
Given the current scenario—a depreciating rupee coupled with stagnant property prices in India—non-resident Indians (NRIs) may want to buy property in India. “There was a huge run-up in property prices in 2011 and 2012. Now they are consolidating,” says Rohit Raj Modi, director, Ashiana Homes Pvt. Ltd, a New Delhi-based real estate firm.
Recently, there has been significant increase in enquiries from NRIs for property in India. “High net worth individuals (HNIs) and people from the middle income group are showing interest as they see this as an opportunity. They either plan to come back at some point in time or have relatives to use the facility,” says Rajesh Saluja, chief executive officer, ASK Wealth Advisors Pvt. Ltd.
However, there are a few things that should be kept in mind before buying a property in India.
Which properties can you buy?
The Reserve Bank of India (RBI) through the Foreign Exchange Management Act (Fema) regulates how NRIs can buy property in India. NRIs can only buy residential and commercial properties and not agricultural land, plantation property and farmland. However, properties falling under these categories can be inherited. “If you already held properties falling under these categories before becoming an NRI, you can continue holding them,” says Saroj Maniar, partner, Contractor, Nayak and Kishnadwala, a Mumbai-based chartered accountant firm. Such properties can only be sold to resident Indian citizen. NRIs can buy multiple residential and commercial properties in India. Also, no prior permission is required for such transactions. NRIs can hold the property in joint names with another NRI but not an Indian resident or a foreign national. The NRI’s foreign address is mentioned in the purchase agreement.
Documentation: “Normally, the documents required for registration of immovable property would include a copy of passport, photographs, copy of permanent account number card and proof of address if it is different from the address mentioned in the passport,” says Maniar.
Customers are also asked for their bank details, says Modi.
Funding: An NRI can either pay through rupee-denominated non-resident ordinary (NRO) or through non-resident external (NRE) and foreign currency non-resident (FCNR) accounts. Loans are also available and can be taken from any Indian bank within India or from a branch of any Indian bank in the NRI’s country of residence.
Exit options
NRIs must have exit options because they face certain restrictions when selling a property. “Before making such investments, NRIs should keep in mind the exit options,” says Chintan Patel, director-transaction advisory services (real estate, industrial and hospitality), EY. NRIs can sell residential and commercial properties to resident Indians, Indian citizens resident outside India or to Persons of Indian Origin resident outside India. Also, under Fema only $1 million can be repatriated each year if the initial investment was made from the rupee-denominated NRO account. However, if the investment was made through NRE or FCNR account, then the amount of initial investment can be repatriated without any cap at one go. “This is also subject to the restriction that an NRI can only repatriate sales proceeds of two residential properties in their lifetime which is over and above the $1 million limit for every fiscal,” says Maniar. However, out of the profits made, only $1 million can be repatriated each fiscal. The rest of the amount needs to be in the NRO account and/or invested in India. Again in the next fiscal, another $1 million can be repatriated.
As far as taxes are concerned, if it is a long-term capital gain, in case the property was held for at least three years, a flat 20% tax is applicable apart from surcharge and cess. However, if it is a short-term gain, then the tax is applicable as per the slab rate plus surcharge and cess.
Real estate investments require a lot of planning and follow up. Falling rupee should not be the only reason to buy a property in India.
Source: http://www.livemint.com/Money/1J8C9YqDn2x7XLGZ0tNKXI/Investing-in-real-estate-is-not-that-simple-for-NRIs.html
17 comments
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ReplyDeleteexcellent information i really like it eviction service
ReplyDeleteThanks for sharing ood and helpful article with us. I really have enjoyed all of this very cool information.
ReplyDeleteNre fixed deposit rates
Very Helpful information for Property buyers... Thanks for this Information
ReplyDeleteAs mentioned earlier., NRI's are preferring to buy Residential and commercial properties only. They are not preferring agriculture land.
ReplyDeleteMost of the persons are trying to invest their capital amount on Lands or Houses, AS the day to day prices are reaching the sky.. Because of this sure profit on real estate, every one is choosing real estate.
ReplyDeleteVery briefly explained about the investments in real estate. Thanks for the information.
ReplyDeleteOne of the best reason is, As the rupee value fell down, Non Indian Residents(NRI's) are preferring to buy Land or property in all the major cities of Bangalore.
ReplyDeleteHere clearly explained the difference the between NRO and NRE. Thanks for information.
ReplyDeleteNot only in Bangalore, In all the prime locations in India it is happening. Real estate is always the best choice for investors.
ReplyDeleteAs per the Foreign n Exchange Management Act(FEMA), Only NRI's having the right to invest in Residential and commercial units only not in farm land or agricultural land. Is there any specified reason behind this. Can any one please elaborate here about this. What about the Indians who purchased it before they become NRI's.
ReplyDeleteI have been planning to write something as an appreciation for Dreamz infra but one thing kept me delaying it was the hectic Schedule of my office time. Here I must admit that I have never seen any real estate company so dedicated to assists their customer. I am regularly getting updates on my project, I hardly got any time to interact with the CRM team but they keep calling me for the project details.
ReplyDeleteWhile I was deciding to buy a flat I met with Dreamz infra, I had the chance to interact with their director in their office near to silk board. Their sincerity and approach made me make my decision on them. I am very happy with the project location and being a civil engineer with my experience I know the construction quality of Dreamz GK is good.
ReplyDeleteI am happy with the staff they have in their sites and at the office both are extremely helpful.
In the going year Dreamz infra came with many pre-launch properties for investors across every corner in Bangalore, with wide range and varieties of offers for all group of buyers. I don't think anyone have missed this opportunity at their last year most real home fair in this fair I have booked 2 flats in their project swadhya and I recommend those who have missed this chance must visit them.
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