How NRIs Can Buy And Sell Properties In India

Non-residential Indians do not enjoy the same taxations on real estate dealings in India as the residents. Before buying or selling the real estate in India, it is essential that they comply with the tax rules. Since the NRIs have been showing tremendous interest in the properties in India for the last few years, the Foreign Exchange Management Act has established some ground rules.

1. If the property has been inherited by the NRI, he would not have to pay the taxes on the ownership. When he sells the property or rent it, he would be liable to pay the taxes for that.

2. Any non-resident Indian can buy immovable properties in India provided it is not any agricultural land or a farm house.

3. If any NRI is buying flats for sale in India worth more than 50 lakh, he would have to pay 1% income tax to the Income Tax Department of India.

4. If NRI takes a home loan to buy the said property, the interest on the loan is deducted from the total taxable income of NRI. If he intends to use the property for himself, the maximum amount that can be deducted is 1.5 lakh. If he is using the property for renting purposes, there is no upper limit on the deduction, it happens to be the total interest on the loan.

5. If the NRI is renting the property bought, 30% of the rent is allowed for the repairs and maintenance of the property. The house tax payment is also allowed as the deduction.

6. When it comes to selling the property which has been owned by the NRI for less than 3 years, the profit is called the short-term capital gain. This gain being equal to the selling price minus purchase price. A 30% tax is imposed on this amount without the adjustments for the property price rises.

7. If the property has been in the possession of the NRI for more than three years, the capital gain tax is imposed on the profit after the property appraisal adjustments. This amount being the selling price minus current price of the property. Moreover, the taxes imposed on the property is 20% in this case. That clearly indicates that if any NRI buys a property in India, he should at least be willing to keep it for 3 years to get a good return on the investment.

8. If the income of the NRI in India from all the sources is more than 2.5 lakh, he is entitled to pay the income tax. The income tax return need not be filed if the total income comprises of only the sale of the properties whether short-term or long-term capital gains.

So, this is all an NRI wants to know about the taxes before dealing with any real estate business in India. The Indian economy provides a great margin of profit on the property transactions. It is extremely beneficial for anybody to invest in India, so in exchange, all India needs is to maximise the return on the foreign investment.

Original Source : http://www.ownaroof.com/blog/nris-buy-sell-properties-india/