Buying or selling a home is one of the most important things you’ll ever do in your life, so are you prepared for it? If the thought of selling your home in India has you worried, we simplify the process for you with this guide to property sales.
Real Estate, like other Indian business, has only recently matured in its treatment of NRIs. Unscrupulous realtors have taken you for a ride in the past, but the times they are a-changing.
Here are some questions you need to ask yourself and some things to consider when you are selling your house in India:
Do you have all the relevant documents?
These include a clear title, taxation, RBI Form IPI 7 declaring immovable property and bank certificate of purchase price. If you have inherited or been gifted the property then check for a clear title.
Who is your buyer?
If you have already found a buyer then you need to consider who is buying your house. Citizens of certain countries such as Pakistan, Bangladesh, Afghanistan, Bhutan, Sri Lanka, China, Iran and Nepal are debarred from owning Indian property except by express permission of the RBI. If you are a PIO, you may sell your property only to a resident of India.
How much are you selling for?
The government publishes an annual figure for cost escalation, called the Cost Inflation Index (CII). This figure times the purchase price is the sale price and anything more than this is your profit. These gains constitute your capital gains.
If you sell in less than 36 months, your gains are termed short-term gains and taxed at income tax rates. After 36 months, they are long-term gains and are taxed @ 20% along with 10% surcharge and 2% education cess.
How can you save on tax?
Re-invest your capital gains in real estate or government bonds within 6 months, if you have an Indian income. If you don’t, a certificate to show that you do not will suffice. Or you could avail of DTAA (Double Taxation Avoidance Agreement) to pay lower taxes in your country of residence.
What about repatriation?
The government allows you to take back $1 million annually from your NRO account, on production of a certificate from your buyer, one from your Chartered Accountant, and the purchase deed. If bought through your NRE accounts, you may repatriate foreign exchange equivalent to what you paid at purchase. Leave the rest in the account – it’s tax free.
Is your money safe?
The guidelines to selling property are laid out on the Ministry of Overseas Indian Affairs web site and using prominent realtors will make it easy for you. So don’t you worry! Decide on how much you’d like to sell your house for, read up on the latest rules and keep this guide handy to see you through a safe and secure sale!
Have you had any experience with Indian Real Estate deals? There is now greater transparency in the sector, but have you felt the change? Are there any other things you would keep in mind during a property sale process?
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