Foreign nationals who intend to buy property in India are strongly advised to seek the assistance offered by a local law firm in India, such as our team of real estate lawyers.
Our English-speaking team will be able to guide you throughout the process which involves several steps and, in some cases, requires special approval.
The guide below is intended for informational purposes and we suggest reaching out to our team as soon as you are ready to buy property in Mumbai or another city.
Even for foreign nationals who comply with all of the existing requirements, restrictions may still be in place for purchasing agricultural land, or farmhouses, among others.
Conditions for foreigners who buy property in India
Property purchase in India is subject to less stringent requirements in case of Indian citizens who reside outside of the country (NRIs) or persons of Indian origin (OCIs)
Foreign nationals, regardless of residency, cannot buy property in India unless they meet the residency requirement of 182 days in a financial year. It is illegal for them to own property in India or to purchase property on a tourist visa. Our Indian lawyers will explain more about the eligibility criteria.
| Quick Facts | |
|---|---|
| Foreigners can buy property in India | Subject to very clear residency rules; prohibited for citizens of certain countries. |
|
Types of properties in India |
Apartments, villas, townhouses, and others. |
|
Real estate agent use |
Yes |
| Real estate agent fees | The buyer and the seller are charged by the real estate broker. |
| Land ownership |
Only subject to special approvals. |
| Deed registration |
Yes |
| The agency with which the property deed is registered |
The Land Records Information System in the respective State |
| Provisional agreement |
Can be used |
| Use of lawyers |
Recommended |
| Initial deposit | Calculated as a percentage of the property’s value. |
| Property due diligence |
Always advisable. |
| Property purchase costs (apart from the asking price) |
Capital gains tax, stamp duty (in some cases), other property taxes imposed by the municipalities. |
| Reasons to buy property in India |
Increasing demand, good appreciation in time, the option to rent/lease (passive income), as well as to secure housing for families interested in relocating to India. |
| Assistance for individuals |
Our Indian lawyers assist Indian citizens and residents who wish to purchase properties in the country. |
| Assistance for investors/corporations | Corporations interested in knowing more about their real estate investment options in India can rely on our assistance. |
Nonresidents, who conduct activities through a branch or another place of business (not including representative offices) can purchase immovable property needed to carry out the activity provided that they obtain an approval from the Reserve Bank.
Under the Permanent Residence Status scheme for foreign investors, the qualifying foreign investor can be allowed to purchase one residential property for personal (dwelling) purposes.
Property matters can be influenced by whether or not the individual who owns or inherits the property has Indian residency or not. Non-residents and non-citizens who inherit property in India are subject to additional approvals. On the other hand, foreign nationals who reside in the country are permitted to purchase property, although they can also be subject to an evaluation.
As mentioned above, a foreign national is not permitted to buy property in India directly, however, he/she shall do so through a transfer of immovable property from a citizen.
The following conditions apply:
- an important condition for the transfer of immovable property is for the recipient to reside in India;
- a foreign national residing in India cannot receive by means of transfer of immovable property agricultural land or farmhouse, nor a plantation property;
- any agricultural land/plantation/farmhouse that is inherited by an Indian citizen can be transferred only to Indian citizens who are permanent residents in the country;
- in order to acquire citizenship by naturalization in India, one needs to lawfully reside in the country for twelve years in most cases.
Buying property in India may not lead to direct Indian citizenship, however, one who is inclined to buy a property and remain in the country for a sufficient amount of time, will be able to apply for citizenship by naturalization. Another option is for foreign spouses of Indian citizens who have been living in the country for at least seven years. our team can give you more details.
If you want to buy property in India as a result of having acquired citizenship, we can provide you with details on how to proceed.
Prohibition on immovable property acquisition in India
Citizens of the following countries cannot buy property in India without the prior approval of the Reserve Bank of India: Afghanistan, Bangladesh, Bhutan, China, Iran, Pakistan, Sri Lanka, or Nepal.
Foreign nationals from the aforementioned countries can only lease property for a maximum period of 5 years.
If you want to buy property in Delhi you can reach out to our team of lawyers in India for more details. If you need legal services in another country, such as USA, we can put you in touch with our local partner lawyers.
Documents required to buy Indian property
Generally, the following documents are required to buy a property in India:
- identity documents (OCI/PIO card, passport);
- passport-sized photographs;
- proof of current address;
- land titles, permits, and approval from authorities;
- proof of paid taxes;
- valuation certificate determining the property’s worth;
- ownership transfer deed;
- power of attorney;
- agreement from housing societies or apartment complexes (if applicable).
Additionally, our lawyers in India recommend opening a local bank account to facilitate real estate transactions. There are plenty of available types of accounts, that are designed for managing funds in Indian or foreign currencies. For loans needed to finance the property purchase, individuals can explore loan options from major banks in India with these account types.
Individuals must also obtain a Permanent Account Number (PAN) card, which is a unique identification number issued by the Indian government for financial transactions. It’s essential for buying a property in India and other financial activities.
After buying a property, individuals will need to obtain a completion certificate from the seller. This certificate confirms that the property is finished as per agreed terms. A form confirming this aspect must be submitted to the Reserve Bank of India within 90 days of purchase.
Although it might seem complex, our attorneys in India can help with drafting and obtaining all required documentation.
Tax implications for buying property in India
NRIs are allowed to purchase any number of properties in India. However, there are limitations on transferring funds from India to the NRI’s country of residence. Our law firm in India can also provide accounting services for tax-related matters.
NRIs, like resident Indians, have a basic exemption limit for income tax. NRIs are not required to pay income tax on income below 200,000 rupees. Individuals above 60 years of age, whether they are NRIs or resident Indians, are eligible for a higher exemption limit of 250,000 rupees.
NRIs are required to pay a withholding tax when they buy a property in India, also known as Tax Deducted at Source (TDS). Its rate is 1% of the property’s value, only if they buy a property worth more than 5 million rupees. There are exemptions from wealth tax for self-occupied properties owned by NRIs. However, if the property is rented out, it becomes subject to wealth tax.
Additionally, buyers will need to pay the stamp duty, which varies depending on the location and ranges between 4% to 8% of the property’s value. There is also the registration fee, rated at 1% of the property’s value and that is paid by the buyer.
Some additional costs might include the real estate agent commission fees, which are rated at around 1% to 2% of the property’s value, plus a VAT of 12.50%. This commission may be split between the buyer and seller.
Statistics on properties sold in India
Individuals interested in buying a house in India might find these statistics useful. These facts refer to the number of properties sold in the country in the first half of 2023:
- A total of 72,700 homes were sold in the Mumbai Metropolitan Region;
- 33,600 houses were sold in the Delhi region;
- The lowest number of sold properties were registered in Chennai, approximately 11,350;
- Additionally, in the year 2023, more than 350,000 housing units were introduced or made available for sale in the residential real estate market throughout India.
Individuals who wish to buy property in Mumbai or Delhi can use such data to time their investment. Our team can help you with information.
If you want to buy property in Delhi or another city, our team of lawyers can assist you.
You can reach out to us as needed, during any phase of the property purchase, or as soon as you decide to buy property in India.
If your goal is not only to buy property but also to relocate to the country, our agents specializing in immigration to India can answer your questions. We are a team with experience in many different areas of interest to foreign nationals living in India and can assist you both before and after you purchase the property and are ready to apply for a residence permit.
Contact us for more information about the services offered by our lawyers specializing in real estate.