The Indian real Estate sector has experienced an expansion in the last ten years and NRIs (Non-Resident Indians) played a significant role in this boom.

Lately, NRIs have been preferring investing in real estate in India as it offers them a range of locations, the possibility for higher returns, and a thriving economy. Several NRIs are encouraged to invest in immovable Property in India as it is a safe investment option that real estate in India offers. Many even choose to return to India due to remote work, willingness to return to India or to get a higher standard of living. Infact, as per a published report, NRIs’ invested upto $13.1 billion in India’s residential real estate market in 2022 with Hyderabad, Bengaluru and NCR finding top spots in their real estate investment wish list.

Benefits That NRIs Get While Investing In Indian Real Estate

Here are the reasons why NRIs like you invest in Indian real estate:

• Iit gives them a higher rate of appreciation and greater long-term rentals
• It helps them diversify their portfolio
• It offers them higher financial returns
• It lets them choose from multiple types of properties
• It generates a consistent income

If you are an NRI and have analyzed that this is the right time to make real estate investments in India, here are seven crucial things you need to know!

Things Every NRI Must Know Before Investing In Indian Real Estate

Let’s take an instance here: If you want to buy a property in Mumbai, you’ll make sure to check out the changing property price trends in Mumbai along with the estimates, past transactions of those properties and best suited localities, to get a fair idea about the property as a suitable investment.

As an NRI, there are more things you need to be aware of like:

• Type of property you want to buy
• The builder of the property
• The document verification process
• The process of taxation

The list does not end here. There’s more to it. Continue reading to know what else is on this checklist!

1.   Know The Property Type

You get the same rights as Indians. But you are prohibited from investing in specific categories of real estate. You can invest in the following types of properties in India:

• Residential properties
• Commercial properties
• Warehouses
• Data centers
• Retail outlets

An NRI is prohibited from investing in agricultural land or farms unless it is either:

• Received as a gift
• Inherited 

2.   Check The Status of RERA

Every housing project you come across in India must be certified under the RERA Act. Make sure to check the RERA status of the property you buy. It is a necessity for both Indian citizens as well as NRIs.

Every real estate project in India has a RERA number. Hence, inquire about the RERA registration of the project you decide to invest in. It will help you determine the legitimacy of the project. Have a clear and thorough discussion about it with your builder too.

3.   Choose A Builder Whose Reputed

Investing in projects by reputable builders is the safest bet to secure your real estate investment. Ensure you investigate the real estate developer thoroughly. Make sure you find out about their previous achieved projects. It will help you decide whether they align with your preferences.

Choosing a reputable builder is pretty crucial for an NRI  because it aids any unexpected circumstances coming your way. Partner with ethical and reputed builders having all the necessary clearances and certifications.

4.   Verify Documents When Needed

If you are seeking a profitable and seamless real estate investment opportunity, ensure you exercise due diligence by confirming the legality of the property. Confirm details like:

• History of the property (if any)
• The current owner of the property
• Disputes that may have occurred before (if any)

5.   Create A Checklist of Your Documents

Here’s the list of documents you need to purchase real estate property in India:

• Your address proof
• Your PIO or OCI card (if you are a Person of Indian Origin or Overseas Citizen of India)
• Your passport (if you are an NRI)
• Your PAN (Permanent Account Number) card
• Your passport-size photographs

6.   Pay Your Taxes

You need to pay tax on real estate investments you make in India. The tax benefits that apply to Indian citizens apply to you as an NR, too. The key source of your taxes if you sell a property in India is the capital gains or profits you earn from it. There are various rates of taxes that are assessed based on the type of capital gain you have.

The tax is deducted the same way for NRIs and Indian citizens. You can request a deduction on stamp duty, head reimbursement and the registration price you incurred while purchasing the property.

7.   Think About Down Payment

If you take a home loan to invest in real estate in India, it is crucial to think about your down payments. Open an NRE (non-residential external) or NRO (non-residential Ordinary) accounts as a requirement if you want to buy a property in India as an NRI. 

The following financial operations need to happen according to the regulations of RBI:

• Purchasing a property
• Selling a property
• Loan repayment (needs to be done via an NRE or NRO account)

You can pay the seller using the following standard channels:

• Cash
• Bank cheques
• Cheques drawn on NRE, NRO or FCNR (Foreign Currency Non-Resident) account if you took a house loan

8.   Hire A Reliable Lawyer

Make sure you have a reliable lawyer by your side while you purchase a real estate property. The lawyer can help you navigate through any financial and legal matters.

Hire a lawyer who can streamline the legal processes for you and also provide legal advice when you need it. There can be gaps that may not get your attention, no matter how diligent you are. A lawyer will also assist you with all the legal procedures and paperwork you need to complete the transaction.

The Bottom Line

If you want to buy a property in Mumbai or any other Indian city as an NRI, it ultimately narrows down to you being able to gauge everything diligently. Whether it is about researching price trends or the legal information about the project and builder, make sure you invest time in it. Try not to leave any legal documentation during the due diligence. Hire a lawyer when you conduct this due diligence to avoid unforeseen circumstances because it is better to be more alert from the start than be in a pickle later, right?