Should NRIs Buy Property in India Before Retirement

"The emotional pull is undeniable for NRIs abroad: a home back in India feels like security, a connection to roots, a vital Plan B for the future. 

Rajesh, a 45-year-old software engineer in Dubai, recently told us that everyone is telling him to buy a flat in Bangalore now. 

They say real estate always appreciates. Should he?'

Rajesh has been in the UAE for fifteen years, and like many NRIs in their 40s and 50s, he's facing immense pressure from family, friends, and even his WhatsApp groups to 'invest' in Indian property before retirement.

I asked him three questions back: "Where will you retire? Do you need rental income now? And what returns are you actually expecting?"

This conversation happens almost weekly at Belong.

But here's what we've learned after advising thousands of NRIs through our community: Real estate is rarely the retirement investment you think it is.

This guide cuts through the noise. We'll show you the real numbers on rental yields, capital appreciation, and tax implications. 

We'll cover what you legally can and cannot buy as an NRI, compare property investment to alternatives like GIFT City FDs or mutual funds, and help you decide whether property makes sense for YOUR retirement plan

The Real Question Nobody's Asking

Before we discuss whether you should buy, let's talk about why you're even considering it.

We've noticed NRIs fall into three camps when thinking about retirement property:

The Emotional Buyer - "I grew up in Mumbai. I want a place to come back to. It's my roots."

The Rental Income Seeker - "I'll buy now, rent it out, and have passive income for retirement."

The Capital Appreciation Believer - "Real estate always goes up. It's the safest investment."

All three motivations are valid. But they lead to very different conclusions about whether buying makes sense.

Here's what often happens: An emotional desire (wanting a home in India) gets justified with financial logic (rental income, appreciation). Then when the property underperforms financially, the emotional attachment keeps you holding it.

We're not saying don't buy. We're saying: be clear on why you're buying and what success looks like.

If you're buying because you genuinely plan to retire in Pune and want a specific house in a specific neighborhood near family, that's a life decision. The financial returns matter less.

But if you're buying primarily as an investment to fund retirement, we need to compare it honestly against other options. Because the data might surprise you.

Also Read -Tax Implications of Investments for NRIs in India Complete Guide

What NRIs Can (and Cannot) Buy in India

Let's start with the basics. As an NRI, the Foreign Exchange Management Act (FEMA) governs what property you can own.

You CAN Buy:

Residential properties - Houses, apartments, villas, builder floors. No limit on how many.

Commercial properties - Office spaces, retail shops, warehouses. Again, no quantity restrictions.

Inherited agricultural land - If you inherit farmland or a farmhouse from parents/relatives, you can keep it. But you cannot sell it to another NRI.

You don't need RBI approval for these purchases. FEMA allows general permission.

Also Read -NRI's Complete Guide to Selling Property in India

You CANNOT Buy (Without Special RBI Permission):

Agricultural land - You cannot directly purchase farmland, plantation property, or farmhouses in India.

Plantation properties - Tea estates, coffee plantations, etc.

The logic: India wants to protect agricultural land from foreign capital and speculation. Even though you're an Indian citizen, once you become an NRI, these restrictions apply.

Exception: If you're buying agricultural land or a farmhouse, you'll need specific approval from RBI on a case-by-case basis. These approvals are rare and complex.

👉 Tip: Many NRIs think buying a "farmhouse" on the outskirts of Bangalore or Pune for retirement is straightforward. It's not. If the land is classified as agricultural, you cannot buy it. Always verify the land classification before falling in love with a property.

Joint Ownership Rules

You can buy property jointly:

• With another NRI
• With an OCI (Overseas Citizen of India)
• With a Resident Indian (must be a close relative like spouse, parent, sibling)

If buying jointly with a Resident Indian, the NRI must be the first holder.

What Happens If You Become a Resident Again?

If you return to India permanently and become a Resident Indian again, you can keep all your properties. Your NRI-bought properties simply convert to resident-owned properties.

If you had inherited agricultural land, you can now sell it to other residents (but still not to NRIs).

Understanding these rules matters because violating FEMA can lead to penalties and legal complications. For complete compliance guidance, use our Compliance Compass tool.

The Financial Reality: What Returns Can You Actually Expect?

Now the part that matters most: Will this property make you money?

Current Market Data (2025)

According to NoBroker's NRI investment report, NRI participation in India's real estate market has grown from 10% in 2019-20 to 15% in 2023. Industry forecasts project this could reach 20% by 2025

Sounds encouraging, right? More NRIs investing must mean it's a good deal.

Not necessarily. Here's what the numbers actually show:

Rental Yields in Major Indian Cities

Compare this to Dubai (where many of our readers live):

UAE rental yields: 5-11% depending on area and property type. A Dh 2.15 million property (roughly ₹5 crores) in Dubai can fetch Dh 170,000-200,000 (₹40-50 lakhs) annually in rent. That's a 6-7% yield.

In India, a ₹5 crore property in a good Bangalore locality might rent for ₹1.5-2 lakhs per month, or ₹18-24 lakhs annually. That's a 3.6-4.8% yield.

And you haven't accounted for:

• Property tax (₹30,000-1 lakh annually)
• Society maintenance charges (₹20,000-50,000 annually)
• Repairs and upkeep (budget 1% of property value annually)
• Property manager fees if you're abroad (10-15% of rental income)
• Vacancy periods (typically 1-2 months per year with tenant changes)

After factoring in all costs (property tax, maintenance, management fees, vacancy), the net rental yield in India typically drops significantly, often falling into the 2-3% range or even lower, depending on the specific city and property type. (Source)

You can get 6.5-7.5% guaranteed in an NRE Fixed Deposit with zero effort, full liquidity, and tax-free returns.

👉 Tip: Don't buy Indian property purely for rental income. The yields don't justify the hassle. Buy only if you plan to use it yourself or you genuinely believe in capital appreciation in that specific micro-market.

Real Estate Investment in India for NRIs – Rules and Pitfalls

Capital Appreciation: The Big Promise

Real estate agents love to show you charts. "Look, Bangalore property prices have doubled every 7-8 years!"

Some truth to that. Over long periods (20+ years), urban Indian real estate has appreciated meaningfully.

But here's what the charts don't show:

Holding costs eat into returns

If your property appreciated from ₹1 crore to ₹2 crores over 10 years (doubling), that's approximately 7.2% annual return.

But you paid:

• Stamp duty and registration: 7-10% upfront (₹7-10 lakhs on ₹1 crore)
• Property tax: ₹50,000 annually × 10 years = ₹5 lakhs
• Maintenance: ₹40,000 annually × 10 years = ₹4 lakhs
• Repairs, painting, etc.: ₹3-5 lakhs over 10 years

Total costs: ₹19-24 lakhs on your ₹1 crore investment.

Your actual return: (₹2 crores - ₹1 crore - ₹20 lakhs) / ₹1 crore = 80% over 10 years, or 6.1% annually.

Compare that to an equity mutual fund averaging 12% over the same period, with zero maintenance headaches.

Liquidity is terrible

Try selling a property quickly in India. It can take 6-12 months in a good market, years in a bad one.

Meanwhile, you can redeem mutual fund units in 3 days, sell GIFT City FD units as per the terms, or exit an NRE FD (with penalty) if needed.

Location matters more than you think

That Tier-2 city plot your uncle recommended? It might not appreciate at all. In fact, many Tier-2 and Tier-3 properties have seen stagnant or declining prices over the past 5 years.

According to JLL India's report, 44.4% of land transactions between 2022 and 2023 occurred in Tier-2 and Tier-3 cities. But transaction volume doesn't equal appreciation.

Only prime locations in Tier-1 cities (Mumbai, Delhi, Bangalore, Pune, Hyderabad) have consistently delivered strong capital appreciation.

👉 Tip: If you're buying for appreciation, focus on established areas in Tier-1 cities with proven demand drivers-IT hubs, good schools, metro connectivity. Avoid betting on "upcoming" areas unless you really understand the local market.

The Tax Maze: What You'll Actually Pay

This is where property investment in India gets complicated. And expensive.

Rental Income Taxation

Rental income from Indian property is fully taxable in India for NRIs.

Tax treatment:

• Deduct 30% standard deduction (for maintenance, even if you don't spend it)
• Deduct property tax paid
• Deduct home loan interest if applicable
• Remaining amount is taxed at your income tax slab rates

For NRIs, TDS is deducted at 30% on gross rental income (before deductions).

Example:

You own a Bangalore flat. Monthly rent = ₹50,000. Annual rent = ₹6 lakhs.

• TDS deducted by tenant: ₹1.8 lakhs (30% of ₹6 lakhs)
• You receive: ₹4.2 lakhs

When you file your tax return:

• Gross rental income: ₹6 lakhs
• Less: 30% standard deduction: ₹1.8 lakhs
• Less: Property tax paid: ₹30,000
• Net taxable income: ₹3.9 lakhs
• Tax (assuming 30% slab): ₹1.17 lakhs

You already paid ₹1.8 lakhs as TDS. So you get a refund of ₹63,000.

But the process requires annual ITR filing in India. Many NRIs skip this and lose out on refunds.

Also Read -Taxation on Rental Income in India for NRIs

If you're in UAE: No personal income tax there. But you still pay tax in India on Indian rental income. India-UAE DTAA doesn't eliminate this tax since UAE doesn't tax income-it just prevents double taxation if there was tax in both countries.

For complete tax planning guidance, read our NRI taxation guide.

Capital Gains Tax on Property Sale

When you sell the property, capital gains tax applies.

If sold within 24 months of purchase (Short-term capital gains):

• Taxed at your income tax slab rate
• TDS: 30% (plus surcharge and cess) if buyer is NRI
• TDS: 1% if buyer is resident and sale price > ₹50 lakhs

If sold after 24 months (Long-term capital gains):

This got complicated after Budget 2024. Two options:

Option 1: 20% with indexation (for properties purchased before July 23, 2024)
Option 2: 12.5% without indexation (properties purchased after July 23, 2024)

You can choose whichever results in lower tax.

Example:

You bought a property in 2015 for ₹1 crore.
Sell in 2025 for ₹2 crores.

Indexed cost (with inflation adjustment using Cost Inflation Index) = ₹1.45 crores approximately.

Capital gains = ₹2 crores - ₹1.45 crores = ₹55 lakhs
Tax at 20% = ₹11 lakhs

Without indexation: Capital gains = ₹1 crore, Tax at 12.5% = ₹12.5 lakhs

So you'd choose the indexed option and pay ₹11 lakhs tax.

For resident Indians, Section 54/54F allows exemption if reinvesting in another property. For NRIs, this exemption is available BUT with a catch: the new property must also be in India, and you must hold it for 3 years.

If you're retiring abroad permanently and selling your Indian property, you won't get this exemption unless you buy another Indian property (which defeats the purpose of liquidating for retirement).

👉 Tip: Factor in 12-20% of your capital gains as tax when calculating returns. This dramatically reduces the attractiveness of property vs other investments.

Learn more about capital gains taxation for NRIs.

Other Taxes to Consider

Property tax: Annual, varies by city. Budget 0.05-0.2% of property value.

Wealth tax: Abolished in 2015, so no longer applicable.

Also Read -DTAA and Capital Gains Tax: The Confusing Bits Explained

Repatriation: Can You Take the Money Out?

This matters if you're not sure where you'll eventually retire.

Repatriation Rules for Property Sale Proceeds:

If you bought using NRE/FCNR account funds (foreign currency):

• Fully repatriable, no limits
• Can send all sale proceeds back to UAE or any other country
• Need to show proof of original payment and tax clearance

If you bought using NRO account funds (India-sourced income like rent, dividends):

• Repatriable up to USD 1 million per financial year
• This $1 million limit is cumulative across all NRO accounts
• Includes sale of property, shares, bonds, etc.
• Need Form 15CA/15CB and CA certificate

Also Read -How to Repatriate Funds from NRO/NRE Accounts

Number of properties: You can repatriate proceeds from sale of up to two residential properties bought by you as an NRI.

Inherited property: If you inherited property and now sell it, repatriation rules are more restrictive. Generally allowed up to USD 1 million per year limit.

Example:

You bought two flats in Pune in 2015 using NRE account funds (total ₹2 crores).
Now selling both in 2025 for ₹4 crores total.

After capital gains tax (₹30 lakhs approximately), you have ₹3.7 crores net.

You can repatriate all ₹3.7 crores since you paid from NRE account.

But if you'd bought using NRO funds, you could only repatriate USD 1 million (roughly ₹8.5 crores at current rates), which still covers your ₹3.7 crores. But if you had multiple properties or other assets to repatriate, that $1 million annual limit becomes constraining.

For complete rules on fund transfers, see our guide on transferring money from India to UAE.

Also Read -How to Repatriate Funds from an NRI Account to Abroad

The Property Management Nightmare

Here's what nobody tells you: Managing rental property from 3,000 km away is exhausting.

We've heard countless stories from NRIs in our WhatsApp community:

"My tenant stopped paying rent for 3 months. I couldn't evict him because I wasn't in India."

"The property manager I hired was useless. They took their 10% but didn't even get the AC fixed for weeks."

"Water leakage damaged the ceiling. Cost me ₹2 lakhs to fix. I found out 2 months after it happened."

Challenges NRIs Face:

Tenant management - Finding good tenants is hard. Verifying their background when you're abroad is harder. Dealing with problematic tenants is nearly impossible without being physically present.

Maintenance - ACs break, plumbing fails, paint chips. Who will handle it? Property managers vary wildly in quality.

Society politics - Apartment associations in India love their rules and meetings. Miss a few payments or meetings, and your relationship with the society sours.

Unauthorized occupancy - Some tenants sublet without permission or cause disputes with neighbors.

Legal recourse - If something goes wrong, Indian court processes are slow. Being physically absent makes it even slower.

According to a NoBroker survey, 52% of NRIs cite property management as their biggest challenge.

Solutions:

1. Hire a reputed property management company - Yes, they'll take 10-15% of rent, further reducing your yield. But better than the headache. Ask for references from other NRIs.

2. Have a trusted family member or friend as local contact - Someone who can visit the property monthly, handle small issues.

3. Choose low-maintenance properties - New buildings with good builder reputation require less upkeep than older properties.

4. Install surveillance cameras - Wi-Fi-enabled cameras let you check on the property remotely.

5. Use digital payment - Ensure rent is paid through bank transfer, never cash. Easier to track and report.

But even with all this, managing a rental property from abroad is work. Ask yourself: Is the 3-4% net yield worth this effort?

Many NRIs in our community have concluded it's not. They've sold their rental properties and put the money into diversified mutual fund portfolios or GIFT City FDs instead.

👉 Tip: If you're buying property purely for rental income, seriously consider whether alternative investments (bonds, REITs, mutual funds) might give better risk-adjusted returns with zero management hassle.

Also Read -Best Mutual Funds for NRIs to Invest in India

When Buying Property DOES Make Sense

We're not anti-property. For certain NRIs, buying property in India before retirement is absolutely the right move.

You Should Consider Buying If:

1. You're certain about retiring in India

If you're 100% sure you'll retire in Bangalore or Pune or Chennai in the next 5-10 years, buying now can make sense.

Benefits:

• Lock in today's prices (instead of buying after retirement when you have less time to research)
• Customize the property to your retirement needs (ground floor, elevator access, near hospital)
• Start building familiarity with the neighborhood and community
• Potential appreciation while you wait

Example: Many NRIs in their late 40s buy a 2-3 BHK in their target retirement city. They rent it out till retirement (low yield, but not the priority). When they retire, they move in. The property was about securing the future, not investment returns.

For these buyers, we recommend:

• Choose the specific area carefully (near family, good hospitals, social infrastructure)
• Don't overlook retirement cities that offer better quality of life than metros
• Consider ready-to-move-in over under-construction (avoid delays)

2. You want a second home for annual visits

If you visit India for 2-3 months every year and stay with family (but it's cramped), having your own place improves quality of life.

Better than:

• Hotel costs (₹5,000-10,000 per night adds up over 60-90 days)
• Airbnb (₹60,000-1 lakh per month in good locations)

If you're spending ₹3-5 lakhs annually on hotels, buying a ₹50-60 lakh property starts making economic sense over 10-15 years, even ignoring appreciation.

3. You're buying for your parents or supporting family

Many NRIs buy property for aging parents or to provide housing for siblings.

This is primarily a family obligation/emotional decision, not a financial one. But it's still valid.

Just be clear it's not an "investment" in the financial sense. It's a lifestyle/family decision that happens to involve property.

4. You believe in specific micro-market appreciation

Maybe you have deep knowledge of a specific area. You know a metro line is coming. You know a tech park is expanding. You have insights residents don't have.

If you genuinely believe in a specific micro-market's 10-year growth story and are willing to bet on it, property can outperform.

But be honest: Do you really have edge over local buyers? Or are you believing what a sales guy told you?

Most NRIs don't have information advantage. They have information disadvantage (living abroad).

You Should AVOID Buying If:

1. You're buying because "everyone says real estate is safest"

It's not. Equity markets have outperformed real estate over most 15-year periods.

Safety is a myth. Property can:

• Not appreciate for years
• Have legal disputes that freeze it
• Develop structural issues requiring huge repairs
• Be in an area that declines in value

If you want safety, NRE Fixed Deposits or GIFT City FDs offer better capital protection and liquidity.

2. Your primary goal is rental income

The yields don't justify the hassle. Rental income from Indian property is one of the worst risk-adjusted income streams for NRIs.

Better alternatives for income:

• Debt mutual funds with systematic withdrawal
• Dividend-yielding stocks or equity funds
• Senior Citizen Savings Scheme (if applicable)
• Annuity plans

All these offer better yields and less management headache.

3. You're not sure where you'll retire

If there's a 50-50 chance you'll retire in UAE, UK, or India, don't buy property yet.

Why lock capital in an illiquid asset when your future is uncertain?

Keep the money in liquid investments (mutual funds, GIFT City FDs) until your retirement destination becomes clearer.

4. You're stretching yourself financially

If buying this property means:

• Using up all your savings
• Taking a large home loan
• Compromising on retirement corpus building

Don't do it. Your retirement security is more important than owning property.

Remember: Property is one investment option. It's not the only option or even the best option for most NRIs.

Alternatives to Buying Property for Retirement

If you've read this far and are thinking "maybe property isn't for me," here are better alternatives for many NRIs:

1. Build a Diversified Investment Portfolio Instead

Instead of putting ₹1 crore in one property, consider:

• ₹40 lakhs in equity mutual funds (SIPs over 5-10 years)
• ₹30 lakhs in GIFT City USD FDs (tax-free returns)
• ₹20 lakhs in debt mutual funds or bonds
• ₹10 lakhs in liquid funds (emergency corpus)

Over 10-15 years, this portfolio likely outperforms a single property. Plus:

• Full liquidity (can access anytime)
• No management hassle
• Better tax efficiency
• Diversification across assets

For detailed comparison, read our guide on retirement corpus planning - SIP vs FDs vs Mutual Funds.

2. Invest in REITs (Real Estate Investment Trusts)

Want real estate exposure without the headaches?

REITs let you invest in commercial properties (office buildings, malls, hotels) through the stock market.

Benefits over direct property:

• Liquidity (trade on stock exchange)
• No tenant management
• Professional management
• Mandatory 90% of income distributed as dividends
• Diversification across multiple properties

Taxation for NRIs:

• Dividend income: Taxed as per slab (TDS applicable)
• Capital gains: Same as equity (short-term 20%, long-term 12.5%)

Currently, REITs in India offer 6-8% distribution yields, significantly better than residential property rental yields.

You can invest in Indian REITs through your NRE/NRO account with a Demat account.

👉 Tip: If you like real estate but hate property management, REITs offer a middle ground. You get real estate exposure with stock-like liquidity.

Also Read - Best Monthly Investment Plans in UAE

3. Consider Senior Living Communities (When You're Closer to Retirement)

There's a growing trend of senior living communities across India-managed residential complexes designed for retirees.

Benefits:

• Healthcare facilities on-site
• Social activities and community
• Maintenance handled
• Security
• Age-appropriate infrastructure

Cost structures vary:

• Some require purchase (like a normal apartment, but age-restricted)
• Others are rental/lease models
• Some offer life-care agreements (pay upfront, live for life)

According to an HDFC Bank survey, close to 90% of NRIs are ready to invest in senior housing.

If you're 10-15 years from retirement, it's too early to buy into senior living. But keep it on your radar. When you're 5 years out, start researching options in your target city.

For now, keep your capital liquid so you can make the right choice closer to retirement.

4. Gift City Alternative Investment Funds (for HNIs)

If you're a high-net-worth NRI (investable corpus > $250,000), consider GIFT City Alternative Investment Funds.

These offer:

• Tax-free returns for NRIs
• Diversification across asset classes
• Professional management
• Returns targeting 10-15% annually

Through Belong, you can access these sophisticated investment vehicles that were previously available only to ultra-rich investors.

5. Keep Building Your Retirement Corpus in Diversified Assets

Don't get distracted by the property question.

Your #1 priority should be building adequate retirement corpus (₹5-8 crores for comfortable retirement in India, as we discussed in our retirement planning guide).

How you build that corpus matters more than which single asset you choose.

A disciplined approach:

• Regular SIPs in equity mutual funds
• Stepping up investments as income grows
• Keeping some capital in fixed-income for stability
• Monitoring and rebalancing annually

Property can be one part of that plan. But make sure it's a conscious choice, not a default.

The Process: If You Do Decide to Buy

Let's say you've thought it through. You're certain about retiring in India, you've picked your city, and you want to buy property now.

Here's how to do it right:

Step 1: Verify Your NRI Status

Confirm you meet the NRI definition under FEMA. This determines:

• Which account to use for payment (NRE vs NRO)
• Tax treatment
• Repatriation rights

Use our Residential Status Calculator to verify.

Step 2: Choose the Right Property Type and Location

Property type:

• Ready-to-move-in vs under-construction: We recommend ready-to-move unless you have strong reasons (like customization).
• RERA-registered projects only: Protects you from builder delays and frauds.
• Reputed builders: Stick to known names. The 10-15% premium is worth it for peace of mind.

Location checklist:

• Proximity to good hospitals (critical for retirement)
• Connectivity (metro, airport access)
• Social infrastructure (clubs, parks, markets)
• Water supply and power backup
• Society quality and management

Visit the property multiple times. Talk to existing residents. Check online reviews.

👉 Tip: Don't buy based on virtual tours or brochures. Fly down to India, spend 3-4 days in the area, visit at different times of day. You're committing lakhs of rupees-due diligence is worth the flight cost.

Step 3: Legal Due Diligence

This is critical. Hire a reputed property lawyer (₹25,000-50,000 well spent).

Verify:

• Clear title (no disputes, no encumbrances)
• All approvals in place (building plan, occupancy certificate, RERA registration)
• No pending litigation
• Property tax paid up to date
• NOC from society/housing board

Get a title search report. Verify ownership chain going back 30 years if possible.

Common red flags:

• Builder hesitating to show documents
• Title disputed or unclear
• Multiple owners in short succession (sign of potential fraud)
• Property in agricultural zone (but sold as residential)

Walk away from anything that doesn't pass legal scrutiny. Better to lose booking amount than buy a problem property.

Step 4: Arrange Financing (If Needed)

NRIs can get home loans in India. But it's harder than for residents.

Typical loan terms for NRIs:

• Loan-to-value: 70-80% (vs 80-90% for residents)
• Interest rate: 8-10% (slightly higher than resident rates)
• Tenure: Up to 20 years (vs 25-30 for residents)
• Repayment: Must be from NRE/NRO account

Documents required:

• Passport, visa, work permit
• Salary slips (last 6 months)
• Bank statements (last 6 months)
• Employment letter
• IT returns (last 2 years)
• NRE/NRO account proof

Major banks offering NRI home loans:

• ICICI Bank
• HDFC Bank
• SBI
• Axis Bank

Compare rates and terms. Some banks have better NRI servicing than others.

For more details, see our guide on NRI home loans.

Also Read -LIC Housing Finance FD Rates 2025

Step 5: Make Payment the Right Way

Payment MUST be in Indian Rupees through:

• Normal banking channel (wire transfer from abroad)
• Funds from NRE account
• Funds from NRO account
• Funds from FCNR account

You CANNOT pay using:

• Traveler's cheques
• Foreign currency notes
• Cash

If you're paying from NRE account (recommended for easier repatriation later), ensure proper documentation.

Tax implications:

• TDS on property purchase: 1% if buying from a resident and value > ₹50 lakhs
• Stamp duty and registration: 5-10% of property value (varies by state)

Budget for these costs on top of property price.

Step 6: Complete Registration

Property must be registered in your name with the local sub-registrar office.

You can do this via Power of Attorney if you can't be present in India. But executing a PoA is a big deal-choose someone you trust completely (spouse, sibling, parent).

PoA requirements:

• Must be notarized in the country you're in
• Must be apostilled (for countries that are part of Hague Convention)
• Or attested by Indian consulate
• Then registered in India

Once registered, you're the legal owner.

👉 Tip: Don't skip the registration step. Some builders/sellers will suggest keeping it unregistered to "save stamp duty." This is illegal and leaves you with zero legal recourse if things go wrong.

Step 7: Set Up Property Management

If you're renting it out:

1. Find tenants - Use platforms like NoBroker, MagicBricks, or local agents (charge 1 month rent typically)

2. Verify tenant - Get ID proof, job proof, previous landlord reference. Many NRIs skip this and regret it.

3. Agreement - 11-month rental agreement is standard. Get it notarized.

4. Security deposit - 2-3 months rent is normal. Keep in separate account.

5. Rent collection - Set up automatic bank transfer. Never accept cash.

6. Property manager - Hire one if you're not visiting India often. Budget 10-15% of rent.

7. Maintenance fund - Keep ₹1-2 lakhs aside for repairs. Tenants will cause wear and tear.

If you're keeping it locked (for future use):

1. Caretaker - Hire someone to visit weekly, ensure no leakage/damage, pay bills
2. Utility bills - Keep electricity/water in your name, ensure bills are paid
3. Society charges - Don't default. Societies can be difficult if you owe money.
4. Insurance - Get home insurance (₹5,000-10,000 annually). Covers fire, theft, natural disasters.

Real Estate vs GIFT City FDs: A Direct Comparison

Let's do a real comparison between buying a ₹1 crore property vs investing the same amount in GIFT City FDs for a 45-year-old NRI planning to retire at 60.

Scenario 1: ₹1 Crore in Bangalore Property

Purchase costs:

• Property: ₹1 crore
• Stamp duty + registration: ₹7 lakhs
• Home loan processing: ₹50,000
• Legal fees: ₹50,000
• Total initial outlay: ₹1.08 crores

Annual returns (assuming average case):

• Rental income: ₹4 lakhs (4% gross yield)
• Less: Property tax: ₹40,000
• Less: Maintenance: ₹50,000
• Less: Property manager: ₹40,000 (10% of rent)
• Less: Vacancy (1 month): ₹33,000
• Net rental income: ₹2.37 lakhs per year

Taxation on rental income:

• TDS @ 30%: ₹1.2 lakhs deducted
• After deductions, actual tax: ₹70,000 approximately
• Post-tax rental income: ₹1.67 lakhs annually

Property appreciation (assuming 6% annually):

• After 15 years: ₹2.4 crores

Total value at retirement:

• Property value: ₹2.4 crores
• Rental income collected (15 years): ₹25 lakhs (post-tax)
• Total: ₹2.65 crores

Selling costs:

• Capital gains tax (₹2.4cr - ₹1.08cr = ₹1.32cr gain): ₹16-20 lakhs
• Brokerage (1-2%): ₹4-5 lakhs
• Net proceeds: ₹2.40 crores approximately

Effective annual return: ~6%

Scenario 2: ₹1.08 Crores in GIFT City USD FD

Through Belong:

• USD FD amount: $130,000 (at ₹83/USD)
• Interest rate: 5% annually
• Tax-free for NRIs
• Annual income: $6,500 (₹5.4 lakhs at current rate)

After 15 years:

• Principal: $130,000
• Interest accumulated (compounded): $77,000 approximately
• Total: $207,000
• In INR (assuming USD-INR = 100 by then): ₹2.07 crores

Additional benefit:

• Zero property management hassle
• Full liquidity
• No risk of tenant issues
• No maintenance costs
• Protected from INR depreciation

But:

• Lower nominal returns in INR terms (unless rupee depreciates more)
• No tangible asset
• No property to live in

Effective annual return: ~4.3% in USD terms, but with currency hedge

Scenario 3: ₹1.08 Crores in Equity Mutual Funds

Diversified equity portfolio (mix of large-cap and flexi-cap funds):

• Monthly SIP equivalent: ₹6 lakhs per year for first 5 years, then lump sum remaining
• Assumed return: 12% CAGR (historical average)

After 15 years:

• Value: ₹4.2 crores approximately

Capital gains tax:

• LTCG on ₹3.12 crores gain (₹4.2 - ₹1.08): ~₹38 lakhs (12.5% above ₹1.25L exempt per year)
• Net: ₹3.82 crores

Effective annual return: ~9.5% post-tax

The Verdict

For pure financial returns, equity mutual funds >> property > GIFT City FDs

For safety and capital protection, GIFT City FDs > property > equity funds

For retirement use, property wins IF you're certain you'll retire in that city and that specific area.

Our recommendation for most NRIs:

Don't choose just one. Build a balanced portfolio:

• 40-50% in equity mutual funds (growth)
• 30-40% in GIFT City FDs or NRE FDs (safety + tax efficiency)
• 10-20% in property IF it aligns with retirement plan

This way you get growth, safety, and optionality.

For personalized portfolio guidance, join our WhatsApp community or download the Belong app.

What We Recommend at Belong

After working with thousands of NRIs planning their retirement, here's our honest guidance:

For NRIs in Their 30s-Early 40s:

Don't buy property yet.

Focus on:

• Building retirement corpus through SIPs and diversified investments
• Keeping capital liquid and growing
• Monitoring different cities/areas to understand where you might want to retire

You have 20-25 years to retirement. Buying property now locks capital for decades when you're still figuring out life.

Maybe you'll settle in the US. Maybe visa rules change. Maybe your parents relocate. Why commit now?

For NRIs in Mid 40s-Early 50s:

Consider buying IF you're 80%+ certain about India retirement.

At this stage:

• Your career path is clearer
• Family situation is more stable
• Retirement plans are forming
• You have better sense of which city feels right

If you're sure about Bangalore/Pune/Hyderabad, buying now gives you 10-15 years of potential appreciation and lets you lock in the right property.

But if you're still unsure, wait 5 more years. Keep building corpus through liquid investments.

For NRIs in Late 50s (Within 5 Years of Retirement):

Buy if retiring in India. Skip if retiring abroad.

At this stage, clarity matters most.

If retiring in India:

• Buy the property you'll actually live in
• Don't buy as "investment"
• Focus on lifestyle factors (ground floor, near hospital, social infrastructure)
• Consider senior living communities

If retiring abroad (or very uncertain):

• Keep all capital liquid
• You can buy property in India even after retiring if you change your mind
• But selling property if you decide to stay abroad is painful

👉 Tip: The worst mistake we see is NRIs buying property at 55-58 "just in case" and then never moving to India. Now they're stuck with an illiquid asset, tenant headaches, and regret. Wait until you're certain.

Common Mistakes to Avoid

After seeing hundreds of NRI property purchases, here are the biggest mistakes:

1. Buying in Multiple Cities "For Diversification"

One flat in Mumbai, one in Bangalore, one in Pune.

Why? "Diversification."

But that's not how diversification works. You now have:

• 3× the management headache
• 3× the vacancy risk
• 3× the tenant problems
• All your capital still in one asset class (real estate)

Real diversification = spreading across asset classes (equity, debt, real estate, gold). Not buying 3 properties.

2. Buying Under-Construction to "Save Money"

Under-construction properties are cheaper. But:

• Delivery delays are rampant (2-3 year delays common)
• Quality often disappoints versus brochure
• Builder might not complete project
• Your capital is locked without returns

Unless you absolutely trust the builder, stick to ready-to-move.

3. Buying Based on WhatsApp Forward

"Magarpatta phase 17 launching! Prices will double!"

Don't. Do your own research or work with professional advisors.

WhatsApp forwards are often from people incentivized to sell (brokers, agents, builders).

4. Not Factoring in All Costs

Property is expensive beyond the purchase price:

• Stamp duty: 5-10%
• Registration: 1%
• Home loan processing: 0.5-1%
• GST on under-construction: 5% (after deductions)
• Brokerage: 1-2%
• Interior work: 10-15% of property cost
• Annual maintenance: 1-2% of property value

A ₹1 crore property costs ₹1.2-1.25 crores all-in. Budget accordingly.

5. Emotional Buying

"This was my childhood neighborhood."
"My parents want me to buy here."
"This builder is my friend's uncle."

Emotion clouds judgment. Buy where the fundamentals make sense, not where your heart pulls.

6. Ignoring Regulatory Changes

Property-related rules change:

• RERA regulations keep evolving
• Tax laws change (Budget 2024 changed capital gains structure)
• RBI rules on repatriation can change
• FEMA rules get updated

Stay informed or work with advisors who track this. Our Compliance Compass helps.

7. Buying Too Much Property, Too Little Liquid Assets

Don't put all retirement money into property.

You need liquidity for:

• Medical emergencies
• Helping children
• Unexpected expenses
• Opportunity to invest in better options later

Keep at least 40-50% of your retirement corpus in liquid investments (mutual funds, FDs).

Your Next Steps

Property decisions are among the biggest financial commitments you'll make. Don't rush.

This week:

1. Clarify your retirement plan - Where will you actually retire? 80%+ certain about India? Write it down.

2. Calculate your retirement corpus need - Use our retirement planning guide to understand if you're on track.

3. Assess current investments - How much is liquid vs locked? Are you over-indexed in any one asset?

4. Research alternatives - Before deciding on property, understand what else is available (GIFT City FDs, mutual funds, REITs).

If you're leaning toward buying:

1. Visit India for research - Spend 1-2 weeks in your target city. Visit 15-20 properties. Talk to residents.

2. Run the numbers - Calculate all-in costs, realistic rental yields, likely appreciation. Compare to alternatives.

3. Get professional advice - Talk to a SEBI-registered investment advisor (like us at Belong). Get unbiased analysis.

If you're unsure:

Don't buy yet. Keep your capital working in liquid, growing assets. Revisit the property question in 2-3 years when your retirement plans are clearer.

Remember: Not buying property doesn't mean not investing. It means investing smarter.

Many NRIs in our community have built ₹5-8 crore retirement corpora without ever buying property in India. They've done it through disciplined SIP investing, smart tax planning with GIFT City, and staying liquid.

When they retire, they'll have options. They can buy property then if they want. Or rent. Or split time between countries. Optionality is wealth.

How Belong Can Help

At Belong, we're not property agents. We're financial advisors focused on NRI wealth building.

We help you:

• Build tax-efficient retirement portfolios using GIFT City
• Compare investment options objectively (property vs FDs vs mutual funds)
• Understand Indian tax implications and DTAA benefits
• Stay compliant with FEMA and RBI regulations
• Make smarter financial decisions without bias

Tools you can use:

• NRI FD Comparison Tool - Compare rates across banks
• Residential Status Calculator - Understand your tax status
• Compliance Compass - Check if you're following all rules

Download the Belong app for personalized guidance, or join our WhatsApp community of 50,000+ NRIs discussing these exact questions daily.

Your retirement is too important to base on WhatsApp advice or sales pitches. Get expert, unbiased guidance.

Disclaimer: This article is for educational purposes only and should not be considered personalized investment or legal advice. Property investment involves risks. Consult with qualified professionals (financial advisor, property lawyer, tax expert) before making any property purchase decisions.

Sources

1. Reserve Bank of India
2. Ministry of External Affairs
3. NoBroker
4. HDFC Bank - NRI Property Buying Guide
5. Gulf News - NRI Property Investment Analysis 2025
6. Income Tax Department
7. SEBI - Real Estate Investment Trust Regulations

Related Articles:

• Best Investment Options for NRIs in India
• Retirement Corpus Planning: SIP vs FDs vs Mutual Funds
• GIFT City vs Mumbai: Where Should NRIs Invest?
• Real Estate Rules for NRIs: Complete Guide
• How to Sell Indian Property as an NRI
• NRI Tax Guide: Everything You Need to Know