For an NRI, investing in property in Mumbai, a pole attracting lots of people for the property once in India, can be an effective way to secure assets in India. But navigating through Mumbai’s legal land is intricate particularly because of the city’s one-of-a-kind property regulations, and also the nature of the market. Here’s what real estate buyers should be aware of if buying property in Mumbai.
1. Eligibility and Types of Property Which are suitable to be owned
Jotting down in black and white, Residential and Commercial properties can be purchased by NRIs without any special permissions as per the Foreign Exchange Management Act (FEMA). But buying agricultural land, plantation properties or farmhouses is not allowed unless it has been inherited or gifted. So this means that NRIs can buy apartments, commercial spaces and even multiple properties if all of them are of residential or commercial category.
2. Property Due Diligence and Title Verification
Of course, property title verification is important to check the clear and uncontested title of the property. NRIs should:
Check the legal documents of property ownership, such as a Title Deed.
Find out how much the property is encumbered with or carries a liability.
Even if the property is located in Dadar or Borivali, check that the property has all the required authorisations from the relevant municipal bodies.
It could be that working with a local real estate lawyer in Mumbai will make this process simple and that too with due diligence.
3. Power of Attorney (PoA)
Since NRI cannot be physically present in India to complete the transaction of the property, we may appoint someone to our trust who can handle the process on our behalf. A Power of Attorney (PoA) allows a representative who has been appointed to sign documents and make decisions, but only in the way that was defined when the PoA was being developed. In the case of a Specific PoA, only specific actions particularly signing the sale deed are given authority. General PoA gives more control over the property and can be risky unless the person is highly trusted. It is advisable on behalf of the NRIs that the PoA is notarized in their country of residence and is attested at the Indian embassy or consulate.
4. Tax Implications and TDS (Tax Deducted at Source) is Tax Dependent on salary, salary slab in India
Understanding tax obligations is crucial when purchasing property in Mumbai:
The TDS on the property value exceeds ₹50 lakh is 1% if the property has been acquired by an NRI. But while the NRI sells the property in future, the buyer must deduct 20 per cent TDS on the long-term capital gains or 30 per cent on short-term capital gains.
Most properties in Mumbai Central etc areas are subjected to annual property taxes and maintenance charges which are to be taken care of.
NRIs should consult a tax advisor aware of Indian real estate, to avoid any complications.
5. Financing and NRIs Loan Options
Indian banks, however, offer home loans to NRIs; the eligibility criteria may differ. Key points to consider include:
Any amount repaid against an NRI loan must be made through an NRO (Non-Resident Ordinary) account or NRE (Non-Resident External) account (if resident abroad) or remittance from abroad. So banks may require certain terms for the property location and depending upon the value of the property, the loan terms may vary, for example in premium areas like Bandra or Andheri. NRIs can work with a financial advisor to decide the best loan options for an investment as per their repayment capacity.
6. Repatriation of Funds and RBI Rules
Properly, proceeds from the sale of the property can be repatriated but there are specific guidelines issued by the Reserve Bank of India (RBI). Under the rules of repatriation, the NRIs can repatriate up to $1 million per year on capital gains accrued from selling properties. The principal amount is fully repatriable for properties purchased with money from a foreign currency account or an NRI account. It is very important to keep all documents purchased since the RBI may ask for proof of investment origin.
7. Legal Documentation, registration process
Property registration is mandatory for legal ownership in India, and NRIs must ensure:
Well-stamped and registered sale deeds.
ID proof like voter ID card, Driving license, PAN card or Passport.
Registration with the local sub-registrar office in Mumbai (this can vary depending on where you live as well Virar or Borivali)
Applicable stamp duty payment and registration fees to lock the deal and to avoid future disputes.
8. Importance of RERA Compliance
Under the Real Estate (Regulation and Development) Act (RERA), property buyers get real security by mandating project transparency. To be safe, NRI should prefer RERA-registered properties. However, in the emerging Mumbai real estate scenario where property prices have skyrocketed and new projects are coming up in most parts like Andheri and Mumbai Central, it is particularly important to check whether a property is RERA registered.
9. Rental Income Compliance
Out of the 3 main revenue-producing options for NRI, it is important to know what are the local tax implications for NRIs. NRIs need to file tax returns for incomes obtained from the rentals of property in India, and the rental income is taxable. Compliance in this area can be simplified and earnings maximized by working with a chartered accountant who is also an NRI tax expert.
10. Absence Owner Property Management
Dealing with a property from overseas is not easy. Property management services focused on handling tenant relationships, maintenance and legal compliance are the choice of many NRIs. It is especially useful for areas that experience a lot of real estate changes as they do so in places such as Dadar, Andheri and Borivali where on-ground management is important to protect the investment.
Selecting Grish World to Guide You About NRI Real Estate is the best decision you can ever make
At Grish World we work with NRIs to help them seamlessly buy property in Mumbai by providing legal guidance and property management. With our 20 years of real estate market experience in Mumbai, we make sure that our clients are accorded the best standards of service, transparency and security to all our clients. As we understand the complexity of the lives NRIs lead, we have comprehensive solutions that are capable of protecting your investments and helping maximize returns.
Grish World is your helpful partner in availing a comfortable, secure and resounding real estate experience in Mumbai whether you want to buy residential property in Bandra or commercial space in Andheri.
For Appointments and Enquiries, contact Grish World at +91-9152066220.