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There is a perception amongst some NRIs that
they can buy a maximum of two houses in India. Well, this is not true -
NRIs can freely purchase real estate in India. There is absolutely no
restriction whatsoever on the number of houses that an NRI or even a
Person of Indian Origin can buy or sell. Only agricultural land remains
out of bounds.
Moreover, since the
Reserve Bank of India has given general permission in this regard,
there is no requirement of notifying any authority or filing any
paperwork for your real estate transactions.
Just
the one restriction applies - a Person of Indian Origin, ie an NRI who
is a foreign citizen, cannot sell his house to another NRI or a PIO -
he has to necessarily sell the property back to a Resident.
When
property is sold, depending upon the holding period, you will either
earn short-term or long-term capital gains. If you sell the property
after three years of purchase, the gain will be long-term else it will
be short-term.
In either case, once the
tax is paid, the money is freely repatriable. A certificate from a
chartered accountant needs to be submitted to the bank - there is a
specific format for such certificate - which the bank can provide.
Once the chartered accountant certifies that the tax has been provided for, the net sale proceeds can be repatriated.
Here
it must be noted that repatriation is restricted to a maximum of two
properties in a lifetime. This is a major issue that has to be
considered carefully before you buy property in India.
If
you intend to purchase more than two properties, then to maintain
repatriation rights, the third property onwards must be bought in the
names of your other family members. This way husband and wife can buy
four properties; husband, wife and two kids can potentially buy eight
properties and still maintain 100 percent repatriation rights.
