Can NRIs get home loans from Indian banks?

Yes. Most banks offer home loans up to 80% of the property value. Interest rates are slightly higher than for residents-typically 0.5% to 1% more. You'll need to provide income proof from abroad and maintain an NRI account with the bank

What happens to my property if I don't return to India as planned?

Nothing changes. You can continue owning the property as an NRI. If you rent it out, tenant must deduct 30% TDS on rent payments. If you sell, buyer will deduct 20% or 12.5% TDS depending on holding period.

Do I need to inform RBI after buying property?

An NRI who bought residential or commercial property under general permission is not required to provide any documents to the Reserve Bank. However, keep all payment records and documentation for future reference.

Can I buy property in my elderly parent's name?

Yes, if they're Indian residents. You can gift them money through proper banking channels, and they can buy property in their name. But remember-this becomes their asset, not yours. If you want to sell Indian property later, you'll need their consent.

How do I choose between old and new tax regime for property sale?

For most NRIs with property sale as major income, the old regime with Section 54/54F exemptions works better. But if you have limited deductions and lower income, new regime's flat 12.5% on LTCG might be simpler. Consult a CA with your specific numbers. Read our comparison of NRI vs resident tax filing differences .

Real Estate Guide for NRIs Returning to India

You're at Mumbai airport. After 12 years in Dubai, you're finally moving back.

The kids are excited. Your spouse is nervous. You're thinking: "Should I buy a house now or wait until I'm officially a resident again?"

We have had this exact conversation with dozens of NRI clients over the years. The property question always comes up first. And rightly so-it's probably your biggest financial decision during the transition.

Let us walk you through everything you need to know about buying property as a returning NRI.

Should You Buy Before or After Returning?

This isn't just a timing question. It's a tax and compliance question.

If you buy while still an NRI:

You can use funds from your NRE or NRO accounts
You'll face 20% TDS on property sale (if you sell later)
You must follow FEMA repatriation rules
You can claim DTAA benefits if applicable

If you buy after becoming a resident:

Lower TDS rate (1% instead of 20%)
Simpler banking and remittance rules
No repatriation restrictions
But you lose NRI banking benefits

👉 Tip: Most clients buy just before their residential status changes. This gives them time to find the right property while still accessing NRI banking privileges.

Use our Residential Status Calculator to know exactly when your status will change.

What You Can (and Cannot) Buy

The good news: NRIs can freely buy residential and commercial properties in India without RBI permission.

The catch: NRIs cannot buy agricultural land, plantation properties, or farmhouses meant for private cultivation. These can only be inherited or gifted.

You can buy:

Residential apartments and houses
Commercial office spaces
Shop units and malls
Industrial plots (non-agricultural)
Multiple properties (no limit)

You cannot buy:

Agricultural land
Farmhouses
Plantation property (tea, coffee estates)

Exception: If you inherit agricultural land, you can keep it. But if you want to buy a farmhouse near Goa for retirement, you'll need special RBI approval-which rarely gets granted.

For complete regulations, read our guide on real estate rules for NRIs.

The Money Trail: Payment Rules That Matter

All payments must be made in Indian Rupees through normal banking channels or via NRE/NRO/FCNR accounts.

Cash is completely off the table. Even if the seller asks for ₹10 lakh in cash for "registration savings," say no.

Valid payment methods:

Inward remittance from abroad through banking channels
Debit to your NRE account
Debit to your NRO account
Debit to your FCNR(B) account
Home loan from Indian banks (up to 80% of property value)

Strictly prohibited:

Cash payments
Traveler's cheques
Foreign currency notes
Cryptocurrency
Payments made outside India

Every rupee must have a clear audit trail. This becomes critical later when you want to sell or repatriate funds.

Tax Reality Check

Here's where things get expensive if you're not prepared.

When you eventually sell property as an NRI, the buyer must deduct TDS before paying you. These aren't small amounts.

Holding Period	Property Type	Capital Gains Tax	TDS Rate on Sale
Less than 2 years	Any property	Slab rates up to 30% (STCG)	30%
More than 2 years (bought before July 23, 2024)	Any property	20% with indexation	20%
More than 2 years (bought after July 23, 2024)	Any property	12.5% without indexation	12.5%

For properties bought before July 23, 2024, taxpayers may choose between 12.5% without indexation or 20% with indexation.

Compare this to resident sellers who only face 1% TDS on the sale consideration (under Section 194-IA), while NRIs face higher TDS on the full consideration under Section 195.

👉 Tip: If the TDS is higher than your actual tax liability, you can apply for a lower deduction certificate using Form 13. This requires advance planning with a CA.

Learn more about NRI capital gains tax and TDS rules.

The Documentation Checklist

Getting the paperwork wrong delays registration by months.

Your documents:

Valid passport with visa/work permit
PAN card (mandatory)
Proof of NRI status
NRE/NRO bank statements (showing source of funds)
Address proof from your country of residence

Property documents:

Clear title deed
Encumbrance certificate (last 30 years)
RERA registration certificate
Approved building plans
NOC from society/builder
Property tax receipts
Completion certificate

If you can't be present in India, you can authorize someone through a Power of Attorney. Make sure it's notarized and attested by the Indian Embassy in your country.

For step-by-step compliance tracking, use our Compliance Compass tool.

Smart Ways to Save on Tax

The government gives you legitimate tax breaks-but you must use them within strict timelines.

Section 54: The Reinvestment Route

If you sell one property and buy another residential property in India, you can save tax on the gains.

Rules:

Buy the new property 1 year before or 2 years after the sale, OR
Construct within 3 years of sale
Capital gains exemption capped at ₹10 crore
Up to two replacement properties allowed if gains ≤ ₹2 crore (only one otherwise)

Full details: Section 54 capital gains exemption

Section 54EC: The Bond Route

Section 54EC allows investing up to ₹50 lakhs in specified bonds to save tax on long-term capital gains.

You must invest within 6 months of sale. These bonds have a 5-year lock-in period.

Section 54F: For Non-Property Assets

If you sell shares, gold, or other assets and want to invest in a house, Section 54F lets you claim exemption.

Conditions are stricter-you cannot own more than one house property when you make the investment.

Common Pitfalls

Mistake #1: Ignoring rental income tax

If you rent out the property before moving back, that rental income is taxable. Your tenant must deduct 30% TDS on rent.

Many NRIs don't file returns for rental income and face notices years later. Read our guide on rental income taxation and TDS on rent paid to NRI landlords.

Mistake #2: Not planning for repatriation

You can repatriate up to $1 million per financial year from property sale, provided the purchase was made using foreign funds.

But repatriation requires:

CA certificate
Proof of original payment through banking channels
Tax payment proof
Form 15CA and 15CB filing

Learn about filing Form 15CA and 15CB online.

Mistake #3: Buying jointly with non-NRIs

NRIs cannot purchase real estate in India jointly with non-NRIs unless the property is inherited.

You can buy jointly with:

Another NRI
An Indian citizen (your spouse, if they're a resident)
A PIO or OCI

Also Read -Can NRIs Open Joint Accounts with Residents in India

Mistake #4: Skipping title verification

Hire a good property lawyer. Check for:

Clear title going back 30 years
No pending litigation
All approvals in place
No encumbrances

One client bought a flat in Pune and discovered 3 years later that the builder hadn't transferred land properly. Legal battle is still ongoing.

After the Purchase: What Changes When You Become Resident

Once you're back in India for more than 182 days, your residential status changes.

You'll need to:

Convert your NRI accounts to resident accounts
File tax returns as a resident (your global income becomes taxable)
Update property records with your new resident status

The property ownership itself doesn't change. But your tax treatment and banking access will.

For a complete transition checklist, read our guide on returning to India as an NRI.

Your Action Plan

Property buying should support your return-not complicate it.

Here's what to do:

Check your residential status using our calculator
Time your purchase based on tax and compliance needs
Verify property documents thoroughly
Plan your payment route through proper banking channels
Understand tax implications before signing

While you're managing your India finances, consider building a parallel savings strategy. At Belong, we help NRIs invest in USD fixed deposits through GIFT City-giving you tax-free returns and protection from rupee depreciation.

👉 Download the Belong App to explore tax-efficient investment options alongside your real estate plans.

Have questions about NRI property rules or tax planning? Join our WhatsApp Community where NRIs discuss real estate, taxation, and investment strategies every day.

Sources:

Reserve Bank of India - FEMA Guidelines on Property Acquisition

Income Tax Department - Capital Gains Taxation

DBS Bank India - Capital Gains Tax Guide 2025

ClearTax - TDS on Sale of Property by NRIs