NRI Real Estate Investment in India
Real estate continues to be a preferred asset class for many NRIs. Whether it’s emotional ties to India, diversification, or rental income, owning property in India can make financial sense—if done right. However, it also comes with legal, tax, and repatriation complexities.
This guide simplifies the rules, shows you how to estimate returns, and helps you plan your exit strategy.
Can NRIs Buy Property in India?
Yes, NRIs are allowed to buy most types of property in India under the FEMA guidelines. However, there are some restrictions.
What You Can Buy
- Residential property (apartment, villa, plot)
- Commercial property (office spaces, shops)
There is no limit on the number of residential or commercial properties you can buy.
What You Cannot Buy
- Agricultural land
- Plantation property
- Farmhouses
Even if inherited, these cannot be actively purchased by NRIs without special permission from RBI.
How to Fund the Purchase
NRE/NRO Accounts
You can fund the property purchase using:
- Funds from NRE or NRO accounts
- Inward remittances through normal banking channels
All transactions should be documented and routed through Indian banks for FEMA compliance.
Home Loans
Banks in India offer home loans to NRIs, but with stricter documentation:
- Valid passport and visa copy
- Salary slips or income proof
- Overseas bank statements
- Power of Attorney in India, if you’re not physically present
Tax Implications on Real Estate for NRIs
Rental Income
Rental income from Indian property is taxable in India. TDS at 30% applies if you’re an NRI. However, you can claim standard deductions and file a return to get a refund.
Capital Gains
- Short-term gains (property held <2 years) are taxed at slab rates
- Long-term gains (held >2 years) taxed at 20% with indexation
You can save on long-term capital gains tax by reinvesting under Section 54 or investing in 54EC bonds.
Example: Real-Life NRI Investment
Raj, an NRI in the US, bought a 2BHK apartment in Pune in 2018 for ₹70 lakh. In 2024, he sold it for ₹1.1 crore. The indexed cost came to ₹85 lakh, so his capital gain was ₹25 lakh. He reinvested in another property within 6 months, saving tax under Section 54.
What ROI Can You Expect?
Property in India generally gives returns in two ways—rental income and capital appreciation.
- Rental yields: 2–3% annually on residential property
- Capital appreciation: 5–10% in key metro and Tier-1 cities
Commercial properties tend to offer higher rental yields (6–9%), but require more due diligence and may face longer vacancies.
Exit Strategy: Repatriation of Sale Proceeds
Selling your Indian property is only half the job—getting your money out legally is equally important.
From NRE-Funded Property
If the purchase was from NRE funds, you can repatriate the entire sale proceeds (subject to conditions).
From NRO or Local Funds
You can repatriate up to $1 million per financial year, including all assets and income. You’ll need:
- CA certificate (Form 15CB)
- Form 15CA filed on the income tax portal
- Proof of purchase and capital gains tax paid
It’s advisable to consult a tax advisor in India before initiating repatriation to avoid any issues.
Key Tips for NRIs Investing in Indian Real Estate
- Always register the property in your name and keep title documents safe
- Appoint a trusted Power of Attorney if you’re not in India
- Verify builder credentials and RERA registration for new projects
- Keep funds and transactions well-documented for tax and legal clarity
- Reassess the property every few years to align with your goals
Final Thoughts
Real estate in India can be a solid part of your diversified NRI portfolio—but only when you understand the full picture. Be clear on what you can buy, fund purchases legally, know your taxes, and plan your exit smartly.
When done with the right structure and timing, NRI property investments can offer both emotional satisfaction and financial value.