Often an NRI would want to get a
proper insight into the nitty-gritty’s of buying a home in Chennai. In our
earlier article on “The Economics of owning a home”, we had discussed briefly
about how NRI can go about purchasing a home in India. In this post, we shall
elaborately discuss how an NRI can benefits after owning a home in India.
It is a known fact that an
individual NRI need not get any approval from RBI or any other government
authority to buy a property. He also need not pay any tax whatsoever for
acquiring a property in India.
On renting the property, we have
earlier discussed that there is no restrictions renting the property purchased.
However he has to give his PAN details if he has rented out and wants the rental
income to be repatriated to him.
Many NRI prefer to get the rental
income collected by his parents.
Also we have seen that the
purchased property of the NRI can be sold. The sale proceeds would be subject
to capital tax gains in India. If the property was held for less than 3 years,
the NRI should pay roughly 30% as tax. If the property on the other hand is
held for more than 3 years, the capital tax would work out nearer to 20%.
Now let us see some other smaller
things that any NRI would be interested to get informed:
1) If you decide to rent out the purchased property, appoint
a caretaker in the absence of your parents. A good lease and rental agreement
should be made before renting it out.
2) Even if you are a US green card holder, the rules for NRI
applies for you too and you can purchase a maximum of 2 properties from your
NRE account.
3) One has to pay the taxes on the rental income at the
rates prevailing. You can opt to pay the tax here and claim the rebate to it in
the country you are domiciled. All you need to check is if the country you are
domiciled is a signatory with India with respect to avoidance of double
taxation.
4) One important doubt many NRI would have is if they retain
their properties they bought when they were in any other country. The answer is
yes. The government does not place any restrictions on this. Only thing is the
NRI has to abide by the rules of the country in which he / she is holding the
property.
5) On selling the property acquired as an NRI, if he has
acquired through his NRE account, he can repatriate money for two residential
properties. If the property was acquired through an NRO account, he can
repatriate only after ten years.
6) One more point to be noticed while selling the property
that was acquired through your NRE account is the amount of money that can be
repatriated is the amount that is equivalent to the amount used to buy theproperty through the NRE account.
7) An NRI can gift properties to his/her relatives here.
This is allowed by the authorities here in India.
