NRI Property Investment Guide: Everything You Need to Know

NRIs face unique challenges buying property in India—legal restrictions, taxation, currency risk. This guide clears the confusion.

Legal Status: What Can NRIs Buy?

NRIs can purchase one residential property per Indian state without special permission. They cannot buy agricultural land, farmland, or plantation property. Multiple property purchases require RBI approval. Always verify current regulations with your lawyer.

Documentation Requirements

You'll need your passport, visa, PAN, OCI certificate (if applicable), and proof of residence abroad. Banks often require additional documents. Start documentation early—delays are common with international transactions.

Taxation on NRI Property Income

Rental income from Indian property is taxed in India, even if you're an NRI. TDS (Tax Deducted at Source) requirements apply to rent payments. Capital gains get special taxation rules. Consult a CA experienced with NRI taxation.

Currency Risk and Money Transfer

Exchange rate fluctuations impact your investment returns. If you buy at ₹80/$ and sell at ₹75/$, you lose money on currency alone. Use LRS (Liberalized Remittance Scheme) for legitimate transfers. Avoid informal channels—they're illegal.

Power of Attorney: Essential for NRIs

Attending closings in person isn't always possible. A registered Power of Attorney authorizes someone in India to sign on your behalf. Choose this person carefully—they hold significant responsibility.

Using Local Agents Wisely

A trustworthy agent becomes your eyes and ears. They conduct inspections, negotiate, and coordinate with lawyers. However, confirm their credentials and check references. Some agents prioritize quick commissions over your interests.

Financing Options for NRIs

NRI mortgages exist but come with higher rates and stricter terms. Many NRIs prefer all-cash purchases to simplify transactions. If financing, compare rates across multiple lenders.

Repatriation Rules

You can repatriate sale proceeds, but TDS on capital gains applies. Recent changes allow easier repatriation of rental income. Work with a CA to navigate these rules and plan for tax-efficient repatriation.

Making Your NRI Investment Work

Success requires: clear investment goals (rental income vs. capital appreciation), local expertise (via trusted agents), proper documentation, tax planning, and currency hedging if needed. Ishanya AI understands NRI-specific challenges. We can help you find properties in strong appreciation markets with good rental yields.