BENEFITS FOR INVESTMENT IN PROPERTY
An NRI property buyer can look at three benefits:
- Self Use : Apart from the pleasure of owning a house, Non-Resident Indian would be very happy to note that if he takes loan for a self occupied house property, then he would enjoy a deduction from his Indian income in respect of interest paid on loan taken for such self occupied residential property. This loan can be taken either from the bank or financial institution so also the loan can be taken from any member of the family or friend or relative.
- Rental Income : A good location property, like the one built by CMRS Group, ensures that you get consistent rental income which increases over time. For the Rental income derived by a NRI, the income is deducted in respect of actual payment of house tax as also a special 30 per cent deduction is available towards repairs, maintenance and collection charges of the property. This special deduction is permissible irrespective of the fact whether you spend on the repairs or you do not spend on repairs.
- Save On Tax : All the properties offered by CMRS Group offer very good appreciation over time and the NRIs are interested in reaping the benefits. In case the property is sold after holding it for three years, it becomes Long-Term Capital Gain for which innumerable tax advantages can be achieved by an NRI. The maximum income-tax payable on Long-Term Capital Gain is just 20 per cent and finally it is possible for the Non-Resident Indian to save such Capital Gains Tax by making investment in new residential property based on the provisions contained in the Income-tax Law.
HOME WORK FOR NRI
- Confirm the nature of property. As per the guidelines from the Reserve Bank of India (RBI), an overseas Indian cannot buy agricultural land, plantations and farm land in the country.
- Verify all the legal documents before buying the land. If you invest in residential projects being built on agricultural land without securing approval from the government, the investment will be deemed illegal, irrespective of who buys the land.
- Make sure that the property has secured all clearances required by law, such as environment and municipal clearances and the authority to transfer the undivided share of land to each apartment owner and the entire plot to the society upon completion of the project.
MAKING THE FINAL PURCHASE
- A sale agreement must be drawn on a Rs 50 stamp paper, which will mention the final amount, advance payment, time limit to pay the due amount and details of installments if any. You need to get it registered at the sub-registrar or Sub-District Magistrate. The NRI buyer's foreign address has to be mentioned in the sale agreement. He can appoint a representative in India (with a power of attorney) to act on his behalf. The power of attorney should be notarized with the Indian consulate in the buyer's country of residence.
- The property can be registered in the name of the NRI; and the holder of the power of attorney can sign on his behalf by producing a copy of the document to the appropriate authorities.
- The payment of purchase price, if any, should be made from either funds received in India through normal banking channels or funds held in a nonresident bank account. You could pay through rupeedenominated non-resident ordinary (NRO) or nonresident external (NRE) accounts and foreign currency non-resident (FCNR) accounts.