6 Jan 2013

How to Buy a Dream Home In India | Purchasing Property in India Tips

How To Buy Home

How To Buy Home
 Buying a home of your own is an ultimate dream of many. Talking of Indians, having a house is matter of pride and reputation for them. People believe that buying a house in India is a difficult task as it requires a lot of searching and filling up of various legal formalities. If you think the same and find the home buying process a burdensome task then our write up will comfort you. Here you will find the complete guide as to how to buy a home in India.

First you need to know how to search for a home:


Property agents: Real Estate or property agents are the ones who have expertise in the field of buying and selling of property. They keep track of the homes to be sold in an area and also carry out a research of the market value of those. They stand by you while negotiating the prices as well as completing the legal formalities.

Online search: Earlier it was only the property agents whom you could consult but now online search is widely used. There are various property sites where hundreds of property options are available with complete details like the built up area, rates, location, etc. What you have to do is simply login and search for a house as per your requirements and budget.

Social connectivity: Having a widespread social circle also assist you in finding a home for yourself.

After selecting the home what all things you need to ensure:


Location: This is the prime thing that you need to look out for before buying a home.
√ Ensure that the surrounding areas are clean and hygienic
√ Ensure that there is proper parking space
√ Ensure that there is adequate greenery in the area (parks, etc.)
√ The roads are properly connected to the neighboring areas

Amenities: The locality in which you are planning to buy a home should be equipped with all the basic amenities like:
√ Efficient drainage system
√ Market should be at a walking distance
√ 24×7 availability of electricity and water

Legal Issues: It is very important to assure that the home to be bought is free from all kinds of disputes and legal issues.

Things to be aware of:


Home loans rates: Check out for the latest home loan interest rates that the different banks and financial institutions are offering. Interest rates for NRI’s are different from that of the Indian citizens so need to be checked out.

Be aware of the general property laws: Apart from the Indian citizens the NRI’s those who wish to buy a home in India must have compete knowledge of the special laws made for them.

Always remember that while choosing your real estate agent ensure that he is reliable and has thorough knowledge and experience in the field. Our write up provides you with almost all the basic information that you require while buying a home in India.

FAQ - How To Buy Home In India:


Are you seeing lot of overseas Indians now more and more interested in buying properties here and is it getting easier for them?


Yes, the Indian government now has recognised the demands of the NRI and people of Indian origin to own piece of property over here in India and over a period of time what we have seen is that the investment is both for them to come back and some form of speculation because India as a market now is giving good returns and the economy is booming so a lot of people are looking to come back. The rules have been much simplified and it is become much easier to buy property for the NRIs.
The new act FEMA (the Foreign Exchange Management Act) that is a vast difference from the regulation act (FERA) has made a tremendous difference in acquisition of property and sale of property and even repatriation of money if one has got property and he is selling it of. Overall things have improved for NRIs and it is a great time to be here 

Could you just run us through check list- what are the keys 2-3 things that you would advice a person once he/she has decided they want a property in India?


It is essential if they have decided on a property they most know about the property- who is the seller, whom they are dealing with. It is a kind of due-diligence process that one must undertake before they acquire the property. A due diligence process would help them to understand what the problem areas could be or what the grey areas could be and they must also acquire the property through proper NRI or NRE account and this can be done in conjunction with the attorney or dependable real estate agent. 

Do you suggest that all of them should actually hire property lawyers and go through property lawyers?


It would be very advisable because if they are sitting abroad they will not understand the actual ground rules that are prevalent here, so if they have somebody who they can hire and can get the best advise. I think that would be the best way to go. 

Are there any RBI approvals needed to buy property in India? Or any taxes to be paid? Will he need a PAN number in India? Or does he have to file any paper work to treasury department back in the US?


He would be happy to know that he doesn't require any approvals. The government of India has granted general permission for an NRI to buy property in India and he has to pay no taxes even while acquiring property in India but however certain taxed have to be paid if he is selling this property. He would require a PAN card if he has rented this property out and he wants to repatriate that money but if it is going to be a sale of property depending on time or the amount of time he has held the property, the sale proceeds would be subject to capital gains tax and as of now if he has held the property for less than 3 years then he would be paying roughly about 30% tax and if the property has been held for more than 3 years then it 20% as capital gains tax and that is what he will have to pay. 

Any limit on how many properties you can buy?


There are limits as of now to residential properties. If he has bought 2 properties then he cannot repatriate for more than 2 residential properties if they have been bought from an NRE account and if the funds have been sent of a rupee account then the limitation is that he has to hold the money in the account or in India for 10 years. So the restriction is 2 residential properties. 

How can one ensure that the land being used by the builder is genuinely for residential purposes- how can one check whether he is credible builder abiding by all the laws - are there certificates of licensing that one can ask him for to ensure that one is not being cheated?


Unfortunately there are no acieration for the builders as of now and there is a move on part of the government to stream line things but as of now there is nothing. As always you need to go to an attorney, you need to speak to people, need to see the track record of the last project that the builder may have done and you also have to check the records of the property that they are build up on and most of the builders if they are genuine will have no problem in showing you this records and giving it to you on a platter. The track record is the best way to judge the credibility of the builder and of course when you see the property the people it is possible to judge and ore than that you can have an good attorney to take care of your interest who will go into finer details and let you know what exactly is the situation on the ground. 

What if an overseas Indian, he is bought property gone back and wants to rent it out - would he be at any kind of a disadvantage or the rent you know the tenancy laws pretty much remain the same?


If you rent it out again, no permissions required, he can rent it out, it's a commercial decision. If he feels that he getting the right price or the right rent, he can rent it out but again check the anticents of the tenant preferably trying to accompany lease so that get all your documents right get it good lease agreement done and have a registered and again use an attorney who can help you out in case of a problem. 

I was looking at real estate as a product for investments but then problem when it came to dealing in financial transactions. I notice that most builders I dealt with wanted my money in two parts, one was what they call as white money by cheque and second was a black money which was in form of cash which must have been okay for most people locally but for somebody coming from abroad where all his money is accounted for it poses as a problem. So paying the black component was kind of an unfair advantage because I am converting my white money to black. So my question is there any work around in this kind of situation?


Black money component, yes, it is there. We cannot hide that fact that there is a black component in the properties that are going in but again things are changing especially If one is dealing with a big builder a reputed builder I don't think that they would encourage splitting off the payment. Infact the big builders specially in the big metros they would look at the client and tell him up front that every payment has to be done through cheques. Infact there are builders who are not only accepting the purchase prize but also the maintenance charges just through the cheque medium and black money has been completely ruled out vis-à-vis with the big builders. 
The smaller builders in the smaller town and again the other issue were that the stamp duties which were payable, which were also attracted and made the black component, part in an agreement. This has with the bringing down of the stamp duty charges or the stamp duty rates; I think this incidence of black money is diminishing definitely. So I would advise Anil (phoner) that he should deal with big builders. 

I hold a green card and am keen to buy a home in Delhi. I want to know whether there are any taxes that one has to pay on buying the property and also are these taxes paid via the builder or would she have to pay them directly, please explain the tax structure?


If she feels to purchase any property, she does not have to pay any taxes. Taxes are only payable at the time of repatriation of the money and as I said earlier it will be subject to a capital gain tax. But at the time of acquiring a property in India there is no payment of tax and if there are any conversion rates of the builder may have paid that he builds into the same price, nothing additional at all. 

I am a UK based lawyer and want to know if I would have to pay taxes if I own a property in India. Also can I avoid taxes on rental income on my Indian property if I am already paying taxes in respect of the same income in the UK?


Yes, he would have to pay taxes on his rental income. He has to pay tax that's a something to remit the money back; he has to pay the taxes at the prevalent rates. But India is a signatory with a lot of countries I have seen over 60 countries where you have the double taxation avoidance agreement and under those he can take advantage and pay the taxes here in India since the property situated here. He can pay the taxes but he can take advantage or equivalent tax rebate in the UK. 

I am from USA and my husband and me are planning to move back from US end of this year. I want to know whether returning Indians can retain their property overseas even after they moved back to India?


Yes, you can. You can retain properties that you acquired while you were a non resident while you were staying there you can acquire those properties and if you were acquire those properties you can maintain those and retain those in these jurisdiction there is no problem or restriction from the government's point of view. 

I wanted to sell my property in Chennai. I just want to know how I can repatriate these funds from the sales deal and what formalities are there are that need to be fulfilled?


Now depending how he acquired the property the repatriation process has to be understood in that contacts of the property has been acquired from NRE account then the restriction is that he can only repatriate money for two residential properties. But if he acquires a property from a NRO, which is a rupee account, then the restriction is more with the timeframe. Then he cannot repatriate that money for ten years. So that is the only restriction if he is acquires from the rupee account and on the payment of taxes he can take his money back. 

But even if you had NRE account, is there a limit that you can repatriate only so much in a year?


Yes, you can only repatriate the amount that you have spend on acquiring the property. That is the other limitation that you have through the NRE accounts but hopefully we are looking at government liberalizing their policies further. 

I recently inherited some family property in Punjab. The siblings have now decided to sell it. Again I want to know how can I repatriate the funds from the sale's deed. Any special regulations when it comes to inherited property?

Yes, the government allows you to repatriate in a calendar year USD 1 million. So if has inherited property worth a million dollars, without a problem he can repatriate that money. So in that respect there shouldn't be any problem. 

Lot of NRI's are buying property, for their parents or relatives. How does that works, can you a sort of gift property in any amount?


Yes, you can gift properties, you can bequeath properties to you relatives here. To your parents, you can but them houses. Not an issue. 



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