Facts for NRI's on Real Estate Market in India

Facts for NRIs on Real Estate Market in India
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09:34 AM 29 May 2019

Deciding where to invest your money is one of the most important parts of the entire investment process. Real estate market in India has always been an excellent investment option, and recent surveys have concluded that over time, they have become one of the best return investments, outperforming stocks and bonds.

Almost all banks and investment managers predict that 2019 will be a more volatile year with low-interest rates, and stocks and bonds will receive significant blows. As a result, real estate is presented as the best option for investment due to its security and stability as a tangible asset.

So, what is needed to succeed in real estate India?

To begin with, here are five key points to consider before investing in properties in Hyderabad, India.

Rental Income

It seems that many cities are tending to the rental culture. It is predicted that rentals on several properties in prominent areas will experience healthy growth in 2019. This means that if you were investing in real estate today, buying to rent is the better option. This benefits real estate investors because they receive income from their properties throughout the investment period, stronger rental markets mean better rental income.

Return on Investments

While many people take into account national, regional and local variables when considering real estate investments. Each property has unique characteristics, so it is difficult to compare it with other seemingly similar properties. Investors with knowledge and experience can evaluate these hidden features and identify the properties that will receive significantly more convenient returns.

Mortgage Rates

The low mortgage rates make an excellent time to invest in real estate and get mortgages. It seems that mortgage rates are rising and it is necessary to consider what happens when payments begin to increase. As mortgage rates rise, many people may find it impossible to make refunds and, suddenly, the attractive rental income becomes negative.

Reduce the Risks

While it may seem a good idea to figure out how much you can afford to invest in real estate and use that amount to buy a single property. To reduce the risk of having all your capital in a single property or a specific area, it is usually a better option to try to buy several smaller properties in different locations. Although real estate is generally a safe and reliable asset, there may be some risk associated with currency fluctuations, political upheavals, natural disasters and even changes in local rental markets. Therefore, if you can have properties in multiple geographic locations, this risk is reduced, if one of your investment properties obtains lower returns.

India is an attractive market in real estate investment for Indians and Non-Resident Indians. There are many NRIs working overseas who have their families living in India. So they are willing to invest in Indian real estate. To meet their needs, the Government of India has made property purchase rules investment friendly.

Below are some key point’s needs to keep in mind for NRI investment in India real estate.

Benefits of Tax

The NRI can claim the tax credit on taxes paid by him in India on the income received from immovable property in his country. He is liable to pay tax on the number of capital gains arising in India. Immovable property held for more than two years is treated as a long-term capital asset and gets the index benefit with taxation at 20 per cent. The income-tax act also allows certain tax deductions under Section 80C to 80TTA and NRIs can use this to reduce their tax burden.

Legal Authority

If NRI he or she who want to buy a home in India should require legal authority, i.e. Power of Attorney. It is the right to the person to act on behalf of another person and helps to manage their property efficiently. Power of Attorney mainly include mortgage, sell, collect rent, lease and sale disputes, perform acts required by banks and enter into contracts. The government has amended the rules to make registration compulsory for such transactions. It helps to control frauds, disputes and stamp duty evasion.

Transparent Transaction

With the recent regulatory changes in India made NRIs believe that the present real estate sector is more efficient and transparent, rendering the environment conducive enough for investment in property. The NRI who want to buy a property in India should check all the documents to facilitate the smooth transactions.

Real Estate Regulations

In property transactions, NRIs will come under the Foreign Exchange Management Act (FEMA).  RBI simplified the rules to the NRIs who has Indian passport needs no approval for real estate investment in India. Under the general permission category, persons of Indian origin require no approval unless they are citizens of another country. The NRI can make payment through the accounts of inward remittance, non-resident rupee (NRE), and non-resident ordinary rupee (NRO).

The stamp duty, registration charges and service tax to be paid according to laws in real estate transactions. NRIs can apply for loans in India but should the amount should be paid back in Indian rupees only.

Property Type

NRIs can purchase many residential and commercial properties. But they are not allowed to buy any form of agricultural land, farmhouse and plantation property unless it has been gifted or inherited by them. The depreciating rupee value and regulatory environment after the implementation of reforms are attracting many NRIs to invest in the Indian realty market.

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By: Shailaja K