The recent times we have seen an interesting new trend in the whole NRI property dealing. NRIs from North America and Europe coming to India to sell their purchased or inherited real estate after they obtain citizenship in these countries. It makes perfect sense if looked into it. Holding on to real estate is not always feasible if one is unable to manage them let it be safeguarding it or maintaining it or renting it and that too in country where NRI land grabbing is a news item in daily new paper.
This is especially true if the NRIs in question do not visit India frequently and are not open to renting out their properties. They prefer not to burden relatives and friends with the task of paying property tax, compliances, maintenance and society dues and see more sense in encashing the capital value of their inherited properties, In some cases anti trust towards relatives is the case.
Selling such property in India is usually not the biggest challenge. What can create confusion is the viability, the ways and means of remitting the resulting funds back into the country of residence and tax complications /compliances involved. There is, in fact, a fairly straightforward process for this and not a lot of NRI’s are aware of it. MYRA takes care of each and every step of the process till your money reaches into your bank account of your residing country.
The aspects that need to be considered while selling property in India.
Tax compliance involved
As in the case of resident Indians, NRIs who sell purchased property after three years from the date of purchase will incur long term capital gains tax of 20 percent on profit made which is the difference between buying amount and selling amount, where the amount is indexed. What does indexed selling amount means?
For Purchased property, The gains are calculated as the difference between sale value and indexed cost of purchase. Indexed cost of purchase is nothing but the cost of purchase adjusted to inflation. Calculation of indexed cost of purchase is easy, you can contact any of our MRYA representatives in any city and you will get an answer on the phone itself.
In case of inherited property, the date and cost of purchase for purposes of computing the period of holding as well as cost of purchase is taken to be the date and cost to the original owner.
To be more precise, the amount of long term capital gains together with the cost to the previous owner (i.e. the person from whom the property is inherited) would be considered as the cost of purchase. NRIs are subject to a TDS, Tax Deducted at Source of 20 percent on the long term capital gains. But good news is that MYRA has a legal way of getting the waiver of the 20% TDS in most of the instances and Total 20% tax itself in some cases. Please talk to MYRA representative for your options.
If the NRI sells the property before three years have elapsed since the date of purchase, short term capital gains tax at his or her tax slab is incurred. Short term capital gain is calculated as the difference between the sale value and the cost of purchase (without the indexation benefit). The NRI will be subject to a TDS of 30 percent irrespective of his or her tax slab.
NRI selling their properties under tax exemption has to complete some applications and formalities that MYRA will take care of on your behalf.
Repatriation from RBI
General permission is available to NRIs and PIOs to repatriate the sale proceeds of property inherited from an Indian resident, subject to certain conditions. If those conditions are fulfilled, the NRI need not seek the RBI's permission. However, if the NRI has inherited the property from a person residing outside India, he or she must seek specific permission from the RBI.
The conditions for repatriation of such funds bit complicated, should not exceed USD 1 million, and should be done through authorized dealers. NRIs must provide documentary evidence with regard to their inheritance of the property, and a certificate from a chartered accountant in the specified format.
What NRIs must pay attention to is the income tax implications in their country of residence. Many countries tax their residents on their income regardless of where it originates from, while others provide partial or total exemption on capital gains arising on sale of a residential house if certain conditions are met. Most of the instances MYRA was able to provide relief on these taxes by their deep study approach.
Why MYRA ?
Sell your property by leveraging the highest level of professional knowledge, commitment, passion, and creative marketing
Provide creative insights and recommendations regarding the highest and best use of your land property
Structure deals, including tax deferred exchanges, to achieve the tax and subsidy benefits you desire
Create problem-solving strategies when you face a land asset challenge, let it be a legal dispute or a litigation
Ensure that your land transaction aligns with current laws and regulations that affect the sale of land
Achieve the maximum return on your property
Deliver professional transaction services with integrity, enthusiasm, and superior service
NRI’s willing to sell your property either inherited or bought or by another means. Do not ruin your vacation to India to the headache process and complications of selling, let MYRA take care of it. Contact us Now