7 hrs ago
Why NRIs Shouldn't Treat Indian Property as Passive Investment
Buying a home in India does not mean the work is over for an owner who lives abroad.
Someone still needs to look after tenants, repairs, rent, taxes and paperwork.
A local helper or property manager can take care of some tasks.
If problems are ignored, they may become costly or lead to disputes.
Rent and property sales also come with tax rules.
When an owner sells, some money may be withheld as TDS, and extra paperwork is needed to send the proceeds abroad.
Exchange rates can also make the property's value look lower in another currency, even if its rupee value stays the same.
Selling may take a long time, while fees and empty periods can reduce earnings.
Owners should plan for these responsibilities and costs.
Owning property in India requires ongoing work managing tenants, rent, repairs, taxes and documents.
Distance can complicate maintenance and oversight; a trusted local representative or paid manager may help.
NRIs must handle tax and compliance obligations, including rental taxation and TDS when selling.
Currency changes can reduce a property's value when measured in an owner's home currency, even if its rupee value is unchanged.
Sales and overseas transfers can involve banking rules, documentation, expenses and potentially long periods without a buyer or tenant.
- Who
- Non-Resident Indians who own or are considering buying property in India.
- What
- Indian property ownership requires ongoing management, tax and compliance work, and planning for currency and sale-related costs.
- Where
- India, with implications for owners living abroad and transferring sale proceeds overseas.
- When
- During ownership, rental periods, and when buying or selling property.
- Why
- Property is not passive: it requires oversight, and expenses, tax rules, currency movements and transfer requirements can affect returns.
Investment potential
Responsibilities and risks
Attractiveness versus passivity
Investment potential
Gaurav Matta said Indian real estate can be an excellent investment for an NRI.
Responsibilities and risks
Matta also said it is rarely passive, because someone must manage tenants, rent, maintenance, taxes, documentation and compliance.
Rupee value versus overseas returns
Investment potential
A property's rupee value can remain unchanged or rise.
Responsibilities and risks
Currency movements can reduce its value when measured in the owner's home currency, as illustrated by Matta's dollar, pound and Canadian-dollar comparisons.
Key facts
- Property tasks
- Tenant management, rent collection, repairs, property taxes, documentation and compliance.
- Rental income
- Rent earned in India is taxable, according to the supplied text.
- Sale deduction
- The text says buyers deduct TDS from the entire sale amount; a lower-deduction certificate may help with cash flow.
- Currency example
- Gaurav Matta says ₹2 crore was about US$238,000 in October 2024 and about US$208,000 at the exchange rate referenced in the article.
- Other currency comparisons
- Matta said the same rupee amount represented an approximately 13% reduction in pound terms and 8% in Canadian-dollar terms.
- Overseas transfers
- Sending sale proceeds overseas requires required banking channels, including relevant NRE or NRO accounts, and tax documentation.
- Potential costs
- Brokerage, legal expenses, taxes, repairs, vacant periods and society maintenance charges can reduce earnings.
Quotes
Gaurav Matta
Co-founder of NRiSimplify
“A property that doubles in rupee value hasn't necessarily doubled your wealth in your home currency. Currency movement alone can make a meaningful difference. For example, a ₹2 crore property would have been worth about U$238,000 in October 2024. At today's exchange rate, the same ₹2 crore is worth about $208,000, a reduction of roughly 13% in dollar terms.”
livemint.com
“Indian real estate can be an excellent investment for an NRI, but it is rarely passive. The investment doesn't end when you buy the property. Someone has to manage the tenant, rent, maintenance, taxes, documentation and compliance. When you sell, you have to deal with capital gains, TDS and repatriation.”
livemint.com
Sources
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