Why real estate investments are hard for NRIs

Getting into real estate

1. Lack of market familiarity

One of the main obstacles for NRIs seeking to invest in Indian real estate is a lack of knowledge about the market. It is challenging for NRIs to comprehend the difficulties of the Indian real estate market due to its complexity and continual changes.

1. Logistics & management

The logistics and distance required when investing in Indian real estate present another difficulty for NRIs. It can be difficult to oversee development, manage tenants, or handle legal matters when managing a real estate investment from abroad.

1. Legal formalities

NRIs may encounter legal obstacles when making real estate investments in India. NRIs may find it challenging to manage the legal formalities required in investing in Indian real estate due to the complication of the country’s property laws, taxes, and regulations.

Exiting investments

1. Taxation

NRIs must pay taxes on their real estate holdings in India as well as in their country of residence. In addition, income from Indian real estate assets, including rental income and capital gains, is subject to taxation for NRIs. To avoid fines and ensure legal compliance, NRIs are advised to comprehend the tax implications of investing in Indian real estate.

1. Liquidity

Liquidity is one of the main obstacles for NRIs wanting to sell their Indian real estate holdings. Due to the widely illiquid nature of the Indian real estate market, it can be difficult for investors to sell their homes and recover their investments.

1. Market conditions

NRIs must thoroughly consider their market possibilities before selling their interests in Indian real estate. The real estate market in India is well known for its erratic values, which are influenced by both political and economic factors. Hence, NRIs should carefully consider their options before deciding to sell their investments.

1. Limits on repatriation

There are strict regulations governing the repatriation of investments made by NRIs in Indian real estate. NRIs find it difficult to sell their investments and send the money home since the Reserve Bank of India (RBI) has restricted the repatriation of cash invested in Indian real estate.

End Note

In conclusion, NRIs investing in India are subject to specific tax regulations. While taxation may seem complicated, it is important for NRIs to understand their tax liabilities and make informed investment decisions to avoid unnecessary liabilities.

Frequently Asked Questions (FAQs)

• Are special permits required for NRIs investing in Indian real estate?

The Reserve Bank of India (RBI) must grant special approval for NRIs to invest in Indian real estate. A PAN card must be obtained, an NRE or NRO bank account must be opened, and tax returns must be submitted.

• What property management challenges may NRIs face when investing in Indian real estate?

NRIs may face several property management challenges, such as finding reliable property managers or service providers, managing repairs and maintenance from abroad, and dealing with tenant issues or disputes. They may also face challenges in renting out their property and collecting rent payments, especially if they are unfamiliar with local rental laws and regulations. To overcome these challenges, NRIs can consider hiring a reputable property management company or partnering with a trusted local contact who can assist with property management tasks.

• Can NRIs acquire home loans from Indian banks for real estate investments?

Yes, NRIs can apply for home loans from Indian banks to finance real estate investments. However, the eligibility requirements for NRIs are stricter than they are for the resident Indians, which might make the process difficult for them. If NRIs are investing in specific properties, such as agricultural land, or if they have a little credit history in India, they can also have trouble getting financing.

Inri, backed by Y Combinator, is an investment platform dedicated to NRIs & OCIs to invest in Indian markets. Inri is like Wealthfront for India, making investing in India fast and hassle-free.

This article does not provide any investment advice. Please consult your financial advisor before investing.