The very first step is to list out your requirements. The budget, location, amenities
and other parameters that you might want to consider important for you and your
family to zero in on the property that you need.
Most quality projects come with a built-in set of amenities like swimming pool,
gym and common recreation areas. There may be other amenities that can be added
at a cost. Look for features that are taken for granted, like pre-connected telephone,
TV and Internet cables, security systems, interior design etc.
Besides the amenities, familiarize yourself with the actual measurements of the
project. Understand the ratio between carpet and the built-up area.
Balconies are usually required to be included as part of the carpet area. Analyze
the plans to understand how much of the carpet area is being taken up by spaces
that are not roofed. Also, understand the common areas that are shared between apartments
and regulations regarding their usage.
As an NRI, you need no permissions to buy property in India. You can also rent out
the property and repatriate your rental proceeds, subject to payment of taxes.
Please remember that an NRI who is an Indian Citizen can sell his Immovable Property
(other than agricultural or plantation property or farmhouse) to another NRI. However,
the transaction has to be routed through India only. In other words, the buyer has
to invest in India by way of remittance from abroad through normal banking channels
or by debit to his account maintained with an authorized dealer.
The sale proceeds of the property must be credited to your bank accounts maintained
with an authorized dealer in India.
Bank or financial institution offering loan: It
is generally safe to take a loan from one of the leading financial institutions.
Rate of Interest: The rate of interest on housing
loans keeps changing constantly. It depends on the tenure of the loan, fixed/floating
rate, credit profile of the borrower etc.
Fixed/floating: You can either opt for a fixed
or floating rate of interest. The fixed rate is generally 50-75 basis points higher
than the floating rate. The floating rate is linked to the PLR of the lending institution.
Processing fees: A processing fee is charged by
financial institutions/ banks for verifying the title report, financial performance,
valuation of flat and so on, and for processing the loan application. This fee can
be up to 1% of the loan amount. During special periods like property exhibitions,
or other events, banks and financial institutions offer special interest rates and
waive/ offer concessions in processing fees, so buyers can benefit from such offers.
If the house is being acquired out of the sales proceeds of an earlier house, the
exemption from the long-term capital gain tax on the sale of the earlier house can
be claimed under U /s. 54. To claim this benefit, the new property should be acquired
one year prior to selling or two years after the date on which the transfer of the
earlier house takes place.
If the new house could not be acquired within a period of one year from the sale
of the earlier house, the sales proceeds should be deposited in a bank or institution,
which runs Capital Gain Accounts Scheme approved for this purpose.
Other issues also need to be considered like if the person acquiring a house already
holds another house, then every year, one of the two house property would be deemed
to be let out (u/s. 24) of income tax Act and the let-out value shall be treated
as income. Hence, appropriate tax planning should be considered.
Further, in the case of individual or HUF (Hindu Undivided Family), exemption is
provided from long term capital gain tax u/s. 54F on sale of any long term capital
asset, if sale proceeds are invested in acquiring a house within prescribed period.
So, a house can be acquired to save on long term capital gain on sale of long term