Investment in immovable Property
NRI/PIO4/Foreign National who is a person resident in India (citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan would require prior approval of the Reserve Bank) may acquire immovable property in India other than agricultural land/ plantation property or a farm house out of repatriable and/or non-repatriable funds.
The payment of purchase price, if any, should be made out of :
(i) funds received in India through normal banking channels by way of inward remittance from any place outside India or
(ii)funds held in any non-resident account maintained in accordance with the provisions of the Act and the regulations made by the Reserve Bank.
No payment of purchase price for acquisition of immovable property shall be made either by traveller’s cheque or by foreign currency notes or by other mode other than those specifically permitted as above.
- NRI may acquire any immovable property in India other than agricultural land/farm house plantation property, by way of gift from a person resident in India or from a person resident outside India who is a citizen of India or from a person of Indian origin resident outside India
- NRI may acquire any immovable property in India by way of inheritance from a person resident outside India who had acquired such property in accordance with the provisions of the foreign exchange law in force at the time of acquisition by him or the provisions of these Regulations or from a person resident in India
- An NRI may transfer any immovable property in India to a person resident in India.
- NRI may transfer any immovable property other than agricultural or plantation property or farm house to a person resident outside India who is a citizen of India or to a person of Indian origin resident outside India.In respect of such investments, NRIs are eligible to repatriate:
- The sale proceeds of immovable property in India if the property was acquired out of foreign exchange sources i.e. remitted through normal banking channels/by debit to NRE/FCNR (B) account.
- The amount to be repatriated should not exceed the amount paid for the property in foreign exchange received through normal banking channel or by debit to NRE account (foreign currency equivalent, as on the date of payment) or debit to FCNR (B) account.
- In the event of sale of immovable property, other than agricultural land/farm house/plantation property in India, by NRI/PIO, the repatriation of sale proceeds is restricted to not more than two residential properties subject to certain conditions.
- If the property was acquired out of Rupee sources, NRI or PIO may remit an amount up to USD one million per financial year out of the balances held in the NRO account (inclusive of sale proceeds of assets acquired by way of inheritance or settlement), for all the bona fide purposes to the satisfaction of the Authorized Dealer bank and subject to tax compliance
- Refund of (a) application/earnest money/purchase consideration made by house-building agencies/seller on account of non-allotment of flats/plots and (b) cancellation of booking/deals for purchase of residential/commercial properties, together with interest, net of taxes, provided original payment is made out of NRE/FCNR (B) account/inward remittances.
Repayment of Housing Loan of NRI/PIOs by close relatives of the borrower in India
Housing Loan in rupees availed of by NRIs/ PIOs from ADs/Housing Financial Institutions in India can be repaid by the close relatives in India of the borrower.
Highlights of RBI Guidelines on NRI Investment in properties in India
I. PERMISSION FOR PURCHASE OF RESIDENTIAL PROPERTY / COMMERCIAL PROPERTY.
NRIs holding Indian passports—No permission required
NRIs holding foreign passports- information to RBI via Form IPI- 7 within 90 days of purchase of property or final payment of consideration. Funds through NRE/NRO accounts.
II. SALE OF PROPERTY
Property held by NRIs in India can be sold. No permission is required from the Reserve Bank of India.
III. REPATRIATION OF SALE PROCEEDS
Repatriation of proceeds from sale of residential property purchased on or after 26th May 1993 is allowed.
The RBI will consider repatriation of the consideration amount remitted in foreign exchange for the acquisition of 2 properties. The sale has to have taken place after 3 years from the date of final purchase deed or from the date of final payment.
Application of repatriation (IPI-8) has to be done within 90 days of the sale of the property.
IV. INCOME FROM PROPERTY
NRIs can let out immovable property in India. The rental income from the investment has to be credited to the NRO account.
- Subject to changes from time to time
- E. & O.E.
NRIs can avail financing assistance in the form of housing loans, for purchasing residential properties in India. These loans are available through leading financial institutions.
- Some of the features of these loans are:
- The applicant must be an Indian passport holder.
- Loan amounts are available up to Rs 1 crore (or 85%) of the cost of the property, whichever is lesser. Processing and administrative charges extra.
- Loan eligibility is decided by the repayment capacity of the individual. Repayment capacity takes into consideration income, age, qualification, number of dependents, other income, amounts and a few other items.
- Between 5 and 10 years, rates of interest vary from 7.75% to 9%.
- Repayment period ranges from 5 to 20 years or on superannuation or on completing 60 years of age.
- The loan is repaid in the form of Equated Monthly Installments (EMIs).
- The security for the loan would be the equitable mortgage of the property financed. This is created by the deposit of the original title deeds of the property with the HFI.
- Local guarantors will also be required in the case of a few institutions.
- Copies of the following documents have to be submitted along with the application for the loan to the institution.
- Employment Contact
- Latest salary slip
- Latest work permit
- Visa stamped on the passport
- Power of attorney to a local individual
- Receipt of payments made for purchasing of the property
- Agreement of sale
- Interest rates and EMIs are subject to change without notice. Check with the financial institutions for prevailing interest rates.
- A salaried applicant should be abroad for at least a year and a self-employed applicant for 3 years.