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Property investment is a crucial decision and international real estate investments need to be chalked out with care and thoughtfulness.
There are different rules and regulations in different countries so getting hold of the best deal is not an easy task.
For conducting a transaction, the Foreign Exchange Management Act, 1999 (FEMA) and the regulations made or directions issued thereunder should be referred to.
The relevant principal regulation is the Foreign Exchange Management (Acquisition and transfer of immovable property outside India Regulations).
Here are some guidelines for property investment as set by the RBI:
- According to section 6(4) of the FEMA, a person residing in India can hold, own, transfer or invest in any immovable property situated outside India if such property was acquired, held or owned by him/ her when he/ she was resident outside India or inherited from a person resident outside India.
- An individual can send remittances under the Liberalised Remittance Scheme (LRS) for purchasing immovable property outside India. In case members of a family pool their remittances to purchase a property, then the said property should be in the name of all the members who make the remittances.
- The prohibition of a resident acquiring property outside India is not applicable if:
-The resident is a foreign national.
-The property was acquired before July 8, 1947 and continued to be held after obtaining permission.
-If it is acquired on a lease not exceeding five years.
- Citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Macau, Hong Kong or Democratic People’s Republic of Korea (DPRK), irrespective of their residential status, cannot, without prior permission of the Reserve Bank, acquire or transfer immovable property in India, other than on lease, not exceeding five years. This prohibition shall not be applicable to an OCI. Foreign nationals of non-Indian origin resident in India (except 11 countries listed at (a) above) can acquire immovable property in India.
- Payment for immovable property has to be received in India through banking channels and is subject to payment of all taxes and other duties/ levies in India. The payment can also be made out of funds held in NRE/ FCNR(B)/ NRO accounts of the NRIs/ OCIs.
Payments should not be made through travellers’ cheque and foreign currency notes.