Step 1: Decide Your Structure
Before searching for property, decide:
- Self-use or investment? — Tax treatment and loan eligibility differ
- Jointly or solo? — Many NRIs add a local family member as co-owner for practical reasons (signing, possession)
- Loan or self-funded? — NRI home loans are available from most major banks at 7.25–9% p.a.
Step 2: Power of Attorney (POA)
Since you're abroad, you'll need a Power of Attorney — a legal document authorising a trusted person in India (parent, sibling, spouse) to act on your behalf for signing agreements, registering the property, and taking possession.
- POA must be executed before an Indian consulate or notarised and apostilled in the country where you reside
- The original POA must be sent to India; your representative will get it stamped and registered
- Use a specific POA (limited to this transaction) rather than a general POA for security
Step 3: NRI Home Loan Eligibility
Most major banks (SBI, ICICI, HDFC, Axis) offer NRI home loans. Key requirements:
| Requirement | Details |
|---|---|
| NRE/NRO Account | Mandatory — EMI must be debited from your Indian account |
| Min Employment | Usually 1–2 years in current job abroad |
| Income proof | 3–6 months payslips, employment contract, overseas bank statements |
| Credit score | CIBIL score 700+ preferred; some banks accept overseas credit reports |
| Max LTV | Up to 90% of property value |
| Max tenure | Up to 30 years |
Step 4: Payment Rules (FEMA)
All payments for property must come from:
- Inward remittance from abroad via normal banking channels
- Funds in your NRE or NRO account
- Home loan proceeds
Cash transactions are not permitted. Keep all payment records — you'll need them to prove source of funds when you sell.
Step 5: Registration and Stamp Duty
Property must be registered in India. Your POA holder can execute this in your absence. Stamp duty varies by state (typically 3–7% of property value). Registration fee is typically 1%. Budget 6–8% of property value for total acquisition costs including stamp duty, registration, and legal fees.
Tax on Rental Income
If you rent out the property, rental income is taxable in India under "Income from House Property." TDS of 30% is deducted by the tenant if the tenant is an Indian resident paying rent above ₹50,000/month. You can claim deductions for municipal taxes paid and 30% standard deduction on net rent.
Selling the Property
- Short-term capital gains (held <2 years): Taxed at your slab rate
- Long-term capital gains (held >2 years): 12.5% (from FY25) with no indexation benefit
- Buyer must deduct TDS of 20% on sale amount if seller is NRI
- You can repatriate sale proceeds up to the original investment amount from NRO account