Real Estate Deep Dive
Navigate RERA, property taxes, and buying a home in India safely as an NRI or returning resident.
Selling US Property Before vs. After Moving
The Tax Trap
If you sell your US home before becoming an Indian tax resident, you only deal with the IRS (and typically enjoy the $250k/$500k Section 121 capital gains exclusion).
If you sell your US home after becoming an Ordinary Resident (OR) in India, India will tax the global capital gains. Because the US Section 121 exclusion does not apply in India, you could face massive Indian capital gains taxes (12.5% without indexation (as per the July 2024 Budget)) on the entire profit.
If you are buying property from an NRI seller, you (the buyer) are legally required to deduct TDS at 20% of the entire sale value at source under Section 195 of the Income Tax Act — regardless of the actual capital gain. Failure to deduct TDS makes the buyer personally liable for the tax. The NRI seller must apply for a Lower Deduction Certificate from the Income Tax Department if the actual tax liability is less than 20%. This is one of the most common and painful surprises in NRI property transactions — factor it into your due diligence before signing.
Buying Property in India
NRI vs. Resident Status
NRIs and OCIs can purchase commercial and residential properties in India, but cannot purchase agricultural land, plantation property, or farmhouses.
RERA (Real Estate Regulatory Authority)
Never buy an under-construction property that is not RERA-registered (note: projects over 500 sq meters or 8 units are legally required to register; smaller projects may legitimately be unregistered). RERA protects buyers from builder delays and fraud. Always check the RERA website of the respective state for the project's compliance status before paying a token amount.
Home Loans
If you apply for an Indian home loan while still in the US (as an NRI), the interest rates are similar, but the paperwork requires US credit reports, W-2s, and Embassy attestations. It is often easier to take a loan once you return and secure a local salary slip.
Repatriation of Property Sale Funds
If you eventually sell your Indian property and wish to move the funds back to the US, you must navigate the Form 15CA/CB process.
- NRIs are limited to repatriating $1 Million USD per financial year out of NRO accounts (where property sale proceeds must be deposited).
- You must obtain a certificate (Form 15CB) from an Indian Chartered Accountant certifying that all capital gains taxes have been paid.
- Note: NRIs can only repatriate sale proceeds for a maximum of two residential properties in their lifetime under these specific RBI (Reserve Bank of India) guidelines.