Things NRIs should keep in mind while investing in real estate in India

If you are an NRI and are planning to invest in real estate in India, you need to know a few things before you take the plunge. Here is a check-list for you:

First and foremost, you need to execute a Power of Attorney (POA) in the name of your spouse, major children or any other trusted relative in India if you are unable to remain present yourself. That way, you would be assigning the power to transact on your behalf to the person in whose favour the POA is executed. Accordingly, in your absence, the person can buy, sell, lease, rent, maintain or enter into any other transaction or deal with the property as desired by you.

Secondly, since long term capital gain earned on property held for more than 24 months attracts tax in India, you can claim indexation benefit on the capital gain tax rate of 20%. You can claim tax credit on taxes paid by you on the income earned from your immovable property in India, thereby reducing your tax burden.

Lastly, since real estate transactions of the NRIs come under the ambit of the Foreign Exchange Management Act (FEMA), you need to be well aware of the rules and regulations. You can pay for real estate transactions in India through your NRE/NRO or FCNR account. Also, if you are applying for a loan to buy a property in India, the loan has to be repaid in India rupee only.