A complete guide on how to invest in properties as an NRI

India’s property market is more than just bricks and mortar; it’s emotional real estate for Non-Resident Indians. With the country’s urban infrastructure evolving and reforms like RERA boosting transparency, the timing feels right for NRIs to explore real estate as a lucrative, long-term asset.

But investing from abroad isn’t without its share of complexities. From choosing the right kind of property to managing taxes and repatriation, here’s how to invest in Indian properties as an NRI without getting lost in the fine print.

Who can invest and what you are allowed to buy

Under FEMA (Foreign Exchange Management Act), an NRI is defined as an Indian citizen who resides outside the country for more than 182 days in a financial year. This also includes Persons of Indian Origin (PIOs) and Overseas Citizens of India (OCIs).

As an NRI, you’re permitted to invest in residential or commercial properties in India. However, the purchase of agricultural land, farmhouses, or plantations is prohibited without special RBI approval. This is a key distinction and one that often surprises first-time NRI investors.

Picking the right property

The Indian property market is incredibly diverse, but before narrowing down your options, you need to define your objective. Are you buying for rental income, capital appreciation, personal use, or as a future retirement home?

Your end goal should guide your choices. For instance, if rental income is your priority, cities like Bengaluru, Hyderabad, and Pune, known for their tech-driven workforce and steady rental demand, are strong contenders. Mumbai and Delhi, though more expensive, offer better long-term value in terms of appreciation and connectivity.

Those with emotional ties or future relocation plans may lean towards hometowns or cities like Kochi or Chennai that offer comfort, familiarity, and lifestyle balance.

Financing the purchase: Loans, accounts, and funds flow

One of the biggest advantages NRIs have today is access to home loans from Indian banks, provided certain criteria are met. Lenders usually require the loan to be serviced through NRE, NRO, or FCNR accounts. Having a local co-applicant or issuing a Power of Attorney can also streamline the process, especially when you’re not physically present in India.

Funding your purchase involves a choice between two key bank accounts:
An NRE (Non-Resident External) account is ideal for inward remittances. It’s fully repatriable, and both principal and interest are tax-free in India. An NRO (Non-Resident Ordinary) account, on the other hand, is better suited for managing income within India, such as rent or dividends. It does involve taxes and comes with a repatriation limit of $1 million per financial year.

Making the right choice here is crucial if you plan to send money back overseas or use the rental income locally.

Documentation

Here’s a checklist of documents you’ll need:

• Passport and visa
• PAN card
• Overseas address proof
• Power of Attorney (if you’re authorising someone else)
• NRE/NRO bank account details

It’s equally important to check the property’s legal status. Ensure clear titles, up-to-date land records, and that the property is RERA registered. Due diligence isn’t optional—it’s your safety net.

Taxes, income, and rules

Understanding taxes on your investment is just as critical as buying the property. Rental income earned in India is taxable. You may also face TDS (Tax Deducted at Source) when selling property, typically around 20%, depending on the holding period and total gains. However, if your country of residence has a Double Taxation Avoidance Agreement (DTAA) with India, you can avoid paying tax twice.

See also: Section 115AD: Tax Implications on NRI investments

If you sell the property and wish to move the money abroad, you can do so through your NRO account, up to $1 million per financial year. Repatriation is easier if the property was originally purchased using funds from an NRE or FCNR account, so keep your funding channels documented and clean.

While property in India offers excellent potential, NRIs must be vigilant about legal risks, particularly around illegal property grabbing. Absentee owners are often targets for encroachment or fraudulent transactions. Ensure that the property is well-documented, has clear titles, and conduct regular checks through your representative or property manager.

Maintain records of purchase agreements, tax filings, and sale deeds, as banks and the RBI may request them during repatriation procedures.

Power of attorney

For NRIs living abroad, travel for property-related tasks is often impractical. That’s where a Power of Attorney (PoA) comes in. It allows a trusted person in India—often a relative or lawyer—to carry out property registration, loan processing, and maintenance on your behalf.

Make sure the PoA is created on legal stamp paper, notarised abroad, and stamped by Indian authorities within three months of it being brought into the country. The wording and scope of the PoA must be precise to avoid misuse.

Why Indian real estate still makes sense for NRIs

Despite global economic shifts, India’s property market remains one of the most promising in Asia. With increased urban migration, digitisation of land records, and improved infrastructure in Tier-2 cities, returns are no longer confined to metros.

According to a 2024 report by Knight Frank, nearly 20% of all residential sales in prime Indian cities were contributed by NRI buyers. Developers like Sobha Ltd. have reported that over 25% of their sales in the luxury and premium housing segments come from NRIs, especially from the Middle East, Singapore, and the US markets.

Currency advantage for NRIs

Another important driver is currency fluctuation. With the Indian Rupee depreciating gradually against major global currencies, NRIs are finding property investment more affordable than before.

Here’s a quick view:

Disclaimer: Exchange rates are indicative and subject to change with market movements. Always check live rates before transactions.

What configurations are NRIs buying?

NRI buyers show a clear preference for larger configurations and premium segments. The most sought-after property types include 3 BHK and 4 BHK apartments, luxury villas, and branded residences. Developers also report a surge in demand for gated community homes with integrated amenities such as clubhouses, concierge services, and enhanced security features that appeal to overseas buyers seeking convenience and asset safety.

Indian real estate can be deeply rewarding, but it demands more than sentiment. It needs a strategy. From setting up the right bank accounts and authorising a Power of Attorney to choosing cities based on rental trends rather than nostalgia, every step must align with your long-term goals.

With the right knowledge and preparation, your property back home can be more than just an address—it can be a future, a fallback, or a foundation.

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