There are many people who have become millionaires today because of investing in real estate due to its potential of generating capital returns as well as rental yields. With the dwindling rate of the rupee in India as well as the booming real estate industry in India, it’s no wonder that many NRIs are investing in on this cash cow! While the real estate prices in the world are stagnating, the rates in India are escalating and with the new Prime Minister of India pounding on his agenda of ‘Invest in India’, the NRIs are indeed taking interest.
Even NRIs who have settled down abroad now prefer to own a residential property back home; aside from being a great investment, it can also serve as a future retirement home. As long as you are an NRI holding an Indian passport, you have quite similar rights to the resident Indians in terms of property ownership under the FEMA (Foreign Exchange Management Act) rules and can invest in residential and commercial properties. The big real estate players regularly organize property shows and exhibitions to woo the cash-rich NRIs to invest in their properties.
However, it hasn’t always been plain sailing for NRI investors as there are some fraudulent realtors who take advantage of the fact that as an NRI, you are rarely around to check on your investment. Here are some tips for the NRI to consider before joining the bandwagon of property-owners in India.
- As long as you hold an Indian passport, you don’t need prior permission from government agencies before investing. You can either do the transaction directly, or through another person to whom you have given power of attorney (POA). You can own as many residential or commercial properties as you can afford, but the transactions will come under the FEMA act.
- You should have a clear purpose in mind before investing in property – is it for personal use or for renting out purposes – and choose the location of the property accordingly. Better returns can be expected from renting out if you invest in properties in developed areas where better infrastructures are available.
- Builder credibility is an important factor to consider before delving into any transaction. A primary check of the track record of the builder should be done along with project implementation history including delays in delivery time. You should also check whether the builder has supplied all the amenities agreed upon in the terms of the contract. Also, do confirm the legality of the property under question and whether all necessary permissions and licenses were taken before building. There are quite a few reliable realtor companies in Kerala including Artech Realtors who have a proven track record.
- NRIs in India get the same tax benefits as residents get as far as property tax rules are concerned and it’s recommended that they stay invested for a period of at least three years to avoid short-term capital tax gain. If the property is given out for rent, the income is taxable, but they are exempted from wealth tax if the property remains vacant.
Finally, NRIs would do well to get a good property manager who would also advise them on the right time to exit, something that every investor deserves!
