NRI Buying Property in India 2026 – FEMA Rules, Tax, Repatriation
What NRIs Can Buy in India
| Property type | Allowed? |
|---|---|
| Residential apartment / villa | Yes |
| Commercial property (office, shop) | Yes |
| Plot for residential construction | Yes |
| Agricultural land | No (RBI restriction) |
| Plantation property | No |
| Farmhouse | No (only if inherited) |
| Multiple properties | Yes (no limit) |
Payment Modes (FEMA Compliance)
Payment must come from one of:
- NRE account (Non-Resident External): foreign income converted to INR; fully repatriable
- NRO account (Non-Resident Ordinary): Indian-source income (rent, dividends); limited repatriation
- FCNR account (Foreign Currency Non-Resident): foreign currency deposit; fully repatriable
- Cheque from Indian rupee account
- Direct inward remittance via banking channel
NOT allowed: cash payments, foreign currency to seller directly, travellers cheques.
Home Loans for NRIs
- All major banks offer NRI home loans (HDFC, ICICI, SBI, Axis specialise)
- Interest rates 0.25-0.50% higher than resident rates
- Loan tenure typically 15-25 years (vs 30 years for residents)
- Loan-to-value 80-85% (slightly lower than resident 90%)
- EMI must be paid from NRE/NRO account or via standing instruction
- Requires income proof from country of residence + Indian bank account
Tax Implications for NRI Buyer
While owning
- Self-occupied: no income tax (notional rent only if 2+ properties)
- Let-out: rental income taxed at slab rates; standard 30% deduction + interest deduction available
- NRI status verified yearly; tax residency tests apply
At sale (capital gains)
| Holding period | Capital gains type | Tax rate | TDS by buyer |
|---|---|---|---|
| Under 24 months | STCG | Slab rate (30% for high earners) | 30% TDS |
| 24+ months | LTCG | 12.5% (post-July 2024) without indexation, or 20% with indexation (taxpayer choice for old purchase) | 20% TDS |
TDS is on entire sale consideration (not just gain), much higher than resident rates. NRI seller must file ITR to claim refund of excess TDS.
Section 54 / 54EC / 54F exemptions
Available to NRIs same as residents – reinvest gains in another residential property or specified bonds within prescribed timelines.
Joint Ownership with Resident Spouse
Common structure:
- NRI as primary owner; resident spouse as co-owner
- Simpler home loan eligibility (resident spouse can take loan, NRI as co-applicant)
- Resident spouse handles ongoing property management
- Lower TDS on rental income if collected by resident spouse
- Estate planning simpler
Each owner’s share of capital gain calculated separately at sale.
Repatriation of Sale Proceeds
- NRI can repatriate up to USD 1 million per financial year from sale of immovable property
- Limited to 2 properties (one each from before and after Apr 2016)
- Beyond 2 properties: full INR proceeds stay in NRO account
- Requires Form 15CA + 15CB (CA certificate)
- Bank handles actual remittance
Documentation Needed
- Passport + visa pages
- Country of residence proof
- Income proof from country of residence (tax returns, salary slips)
- NRE/NRO bank account proof
- PAN card (mandatory)
- OCI / PIO card if applicable
- Power of attorney (if not physically present for registration)
6 Common NRI Buying Mistakes
1. Buying agricultural land. Restricted by FEMA; transaction may be voided.
2. Cash payment to seller. Violates FEMA; can attract penalty.
3. Not opening NRE/NRO before buying. Cannot pay from foreign account directly.
4. Underestimating TDS at future sale. 20-30% TDS creates cash flow shock; plan ITR refund.
5. Power of Attorney too broad. Generic POA misused; specify property-only POA.
6. Not maintaining tax residency clarity. Affects whether you’re NRI for tax purposes year-by-year.
FAQs
Can OCI/PIO buy property? Yes, same rights as NRI for residential and commercial.
Can foreign citizen (non-NRI, non-OCI) buy? Generally no without RBI special approval.
Should I buy in own name or joint with parents? Joint with resident parent simplifies management but complicates inheritance.
Can I take home loan from foreign bank? Yes but ECB rules apply. Most NRIs take Indian bank loans.
Tax in country of residence? Depends on country and tax treaty. India has DTAA with most countries; check specific treaty.
Next Steps
If NRI considering property purchase: open NRE/NRO account first; verify property eligibility for NRI ownership; engage Indian CA familiar with NRI taxation; consider joint ownership with resident family for simplified management.
Related guides:
- First-Time Home Buyer Complete Guide
- Home Loan Interest Rates Comparison
- Joint Home Loan India
- NRI Taxation in India
FEMA rules change. Consult RBI-authorised dealer and CA for current rules. Educational guide.
