NRIs Buying Property In Kochi: A Step-By-Step Guide

Kerala has long been commended for its serene landscape, rich cultural diversity, and active foreign community. The state has drawn interest from foreign investors and played a significant role in India's current real estate boom. Kochi, the commercial center of Kerala, is a noteworthy place to invest in real estate. However, while buying a house in Kochi as an NRI, there are certain financial and legal restrictions. This guide will walk you through the whole process step-by-step to ensure a smooth investment experience.

Types Of Properties NRIs Can Purchase

There are a number of restrictions on the types of real estate that NRIs can buy in India.

• NRIs are allowed to purchase residential properties, such as houses, buildings, bungalows, apartments, villas, etc., to satisfy investment requirements or for their own use.
• The Indian government permits NRIs to invest in a variety of commercial real estate, including offices, warehouses, retail stores, and industrial facilities.
• Agricultural land in India is absolutely prohibited for NRIs. However, there are several exceptions for NRIs who inherit agricultural land. They are also eligible to buy agricultural land if they meet the Reserve Bank of India's (RBI) conditions.
• NRIs buying real estate in India can buy plantation assets, including tea or coffee estates, if they have prior RBI approval.

Documentation And Legal Eligibility

Before making any acquisitions, NRIs should confirm if they are an OCI (Overseas Citizen of India) or a PIO (Person of Indian Origin) in order to ascertain their property ownership rights. NRI real estate transactions in India are governed by the Foreign Exchange Management Act (FEMA), which must be adhered to. Following these legal standards ensures more effective processing and prevents disputes later. Another aspect of the NRI checklist for Kerala real estate purchases is accurate documentation. Important documents include a passport, PAN card, proof of address abroad, and, if relevant, a power of attorney. Since they serve as the foundation for official registration and verification, they are necessary for secure and transparent transactions.

Mode Of Payment

The RBI's financial criteria must be followed while making payments for NRI real estate assets in India. Transactions may only be carried out through authorized financial channels, ensuring the validity and openness of property ownership. Accounts maintained with Indian banks that are classified as Foreign Currency Non-Resident (FCNR), Non-Resident Ordinary (NRO), or Non-Resident External (NRE) can be used to transfer money. The fact that cash payments are not permitted under any circumstances serves to further emphasize the strict compliance criteria. These provisions enhance the security of the real estate purchasing process and align it with national financial norms by safeguarding both developers and investors.

HOUSE LOAN REQUIREMENTS

If additional funding is required, NRIs may apply for a home loan from an Indian bank or housing financing firm. Applicants will need to provide extensive documentation, including proof of address both locally and internationally, as well as identity, including a passport and PAN card. Pay stubs, bank statements, tax returns, job documents like a work permit, employment contract, or visa, and property records are other forms of evidence of income that they must produce. The loan must be repaid in Indian Rupees, and EMIs can be done using either NRE or NRO accounts. If they are not in India, a Power of Attorney (POA) may be required to carry out the necessary actions on their behalf.

Also Read: Under Construction vs Ready To Move Property in Kochi: What Should You Choose?

Tax Implications For NRIs Purchasing Property In India

In India, owning real estate comes with certain taxes. They are:

TDS Deduction

Section 195 of the Income Tax Act stipulates that if the transaction consideration exceeds Rs 50 lakh, the buyer must deduct TDS at the rate of 1% from the amount owing to the seller.

Rental Income

According to Indian income tax regulations, rental income must be disclosed and is taxable.

Capital Gains Tax

There is a 20% long-term capital gains tax on sales and resale after indexation benefits.

Step-By-Step Real Estate Purchase Process For NRIs

The detailed process for NRIs to purchase real estate in India is listed below:

Shortlist The Properties

Do research according to your budget, desired areas, and investment goals. Next, compile a shortlist of developer properties that have been registered, preferably under the RERA.

Acquire A PAN Card

Asset purchases and other financial transactions in India require a Permanent Account Number (PAN) card.

Research Reputable Builders

This is crucial when purchasing from abroad. Seek builders in Kochi who have a solid track record, open and honest business practices, and a stellar reputation for quality.

Hire A Reputable Real Estate Agent Or Legal Advisor

Consult an experienced legal counsel before purchasing a house. An experienced local agent or lawyer may advise you on compliance regulations, legal checks, and market trends.

Verify All Documents

Checking the paperwork is a crucial part of the home-buying process. Examine the property's RERA, municipal permits, ownership history, and title deed. Before you pay, confirm that there are no liens, disputes, or legal encumbrances.

Sale Agreement

Following the completion of all verifications, a sales contract must be signed by the buyer and the seller. This shows the sale's terms and conditions, the date of possession, and the payment schedule.

Register The Property.

The required documents must be signed at the sub-registrar's office by the buyer and the seller.

Possession And NOC.

Check the property to make sure the amenities and delivery quality are up to par. Get a No Objection Certificate (NOC) from the developer or society as well.

Also Read: Things to Know Before Taking a Home Loan for a Villa in Kochi

Conclusion

Investing in Kochi real estate over the long term would yield the most rewards if done with the appropriate legal knowledge. With proper due diligence, verified documents, and the selection of trustworthy builders, NRIs may feel comfortable about their investment and be able to benefit from Kochi's lifestyle benefits. Seek the assistance of certified real estate advisers and attorneys to ensure a seamless and lawful property purchase in India.

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