Tips for NRIs to Invest in Real Estate

Investing in real estate for a Non-Residential Indian (NRI) is easier than ever, thanks to the new real estate rules. Non-Residential Indians, holding valid Indian Passports hold rights similar to Indian residents in property ownership norms under the FEMA rules. They may invest in properties such as residential and commercial units; however, they are not permitted to own forest or agricultural land.


NRIs are entitled to these rights and favourable exchange rate differentials to own properties for their investment. However, the game of investing in real estate may not be as smooth sailing as it looks like for NRIs. More often than not, NRIs may be victims of falling prey to wrong property investment decisions including fraudulent ones as well.

Real estate, unlike any other financial institution, requires the investor to take well informed, calculated decisions. Here are a few things for NRIs who want to invest in Indian real estate to keep in mind.


Regulatory Act

NRIs do not require any prior permission whatsoever to buy a real estate property in India, given that they are in possession of a valid Indian passport. The Reserve Bank of India has simplified rules in order to attract foreign investment.


Types of Properties to Invest in

An NRI is entitled to purchase as many residential as well as commercial properties in India. There is are no restrictions on the number of properties an NRI may choose to invest in. It is imperative to note that there is, however, a restriction on foreign investment when it comes to investing in an agricultural land, plantation property or a farmhouse. Properties like so are allowed only in case they are gifted or inherited by the NRI in question.


Legal Title and Document Checks

It is imperative for the NRI buyer to thoroughly check the legality of the property. A confirmation about the current owner, past history, any legal disputes, or local regulatory approval must be sought before making any deal.

Tax Benefits

As an NRI you too are entitled to enjoy the tax benefits that a residential Indian does on the purchase of property. You may claim a deduction of INR 1 Lakh under Section 80 C of the Income Tax Act, 1961.

It is considered a short term capital gain, should you sell the property under 2 years of purchase and the earnings through the property are taxable. If you sell the property after three years, you may opt to reduce the long term capital gains tax by investing in another property.

Power of Attorney

You will require to give the Power of Attorney to you builder or any trusted associate, if you are planning to buy a property that is under-construction. Seek assistance from your lawyer to appropriately word the document so as to avoid any risks of forgery and secure your property while it is still being developed.


Financial Transactions and Funding

All transactions should be done in Indian Currency through Indian Banks, for any property investment in India. One of the mandates include having an NRI account in an authorised bank.

There are several NRI home loans available under different financial institutions in India. NRIs may easily get funding for the purchase if their documents are clean. Make sure to have a minimum of 20% of the value of the property to invest from your own sources, if you are getting your property funded.

Before you approach any financial institution, it is imperative to check if all of your paperwork is clean and is verified by a lawyer. Take a no-dues certificate from the seller if you are buying a property or if it is jointly held, work towards getting the title cleared.

Also ensure there are no pending bills or dues with any authorities.


The Confederation of Real Estate Developers Association of India (CREADAI) regularly organizes exhibitions to acquaint NRIs with the different investment options and also offers spot loans from the top financial institutions.

Finally, property management is crucial. It is advisable for an NRI to seek professional assistance from a good estate consultant as they may not be in the country to look after its affairs at all times.