Real estate as the term suggests refers to buying, selling, or renting any type of property which includes residential, commercial, agricultural and industrial. It is imperative for a entity or an individual to understand the nuances of this volatile market. Whether you are buying, selling or leasing; you must know the risks involved and legal considerations.
Important points for any real estate transaction
- Complete due diligence of the subject property.
- All registered deeds and documents must be in place.
- Seek professional and legal guidance for drafting of documents and conducting a title search.
- Agreement to Sell must be legally binding.
- Advice on tax must be sought before entering into any transaction.
- If transacting through a power of attorney; please ensure the registering authorities accept the transactions through a power of attorney.
Guidelines for Non Resident Indians/Overseas Citizens/Persons of Indian Origin
- Non Resident Indians/Overseas Citizens/Persons of Indian Origin can inherit any immovable property in India (residential/ commercial/agricultural land/a farmhouse).
- NRI are not entitled to purchase/ buy agricultural/farm land
- There is no tax payable at the time of inheritance since the Estate Duty is now abolished.Similarly for any property received by way of a gift for which the value is more thanFifty Thousand Rupees, the recipient has to include the market value of such property unless he is among the specified relatives of the donor.
- In case the NRI keeps the inherited house for personal use, no tax is payable. Where there is rental income drawn from the property; income tax return must be filed.
- Foreign nationals are not permitted to acquire any immovable property in India, unless inherited from a resident in India. However he cannot sell or transfer such property, without prior permission of the RBI.
- For a sale of property, tax is payable on the income earned from the inherited property. The tax payable is long-term capital gains @ 20%, or tax benefits by purchasing a new house or invest in capital gains bonds such as Rural Electrification Corporation or National Highways Authority of India or Power Finance Corporation and Railway Finance Corporation.
- Sale proceeds up to one million dollars after payment of applicable taxes in India can be repatriated.
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