Why should an NRI buy a house in India?

Buying a house is always on the check-list for everyone. If we look at it from the perspective of investment, NRIs often wonder, why should they buy a house in India? In this article we will be addressing this very question.

Why should an NRI buy a house in India?

Before we get to answering the question “Why should an NRI buy a house in India?” we must consider some very important aspects that revolve around this question, which are: What are the properties NRIs can invest in India? Are there any restrictions? Or can they purchase any real estate property that they want to? Let’s explore this aspect first..

What properties can NRIs buy in India?

NRIs can buy both residential and commercial properties in India. However, they can not buy any Agricultural Land, Farm House or Plantation property. They can only be inherited or received as gifts.

Now we know what are the properties that can be bought by an NRI. But again, is this information sufficient? Another doubt that can arise is how can NRIs buy the properties that they are allowed to? Let’s understand that aspect as well..

How can NRIs invest in Real Estate in India?

NRIs can invest in the real estate properties allowed to them through the following mediums:

1. Self-Transactions using:

  • Funds in their NRE/NRO/FCNR (B) accounts in India
  • Funds remitted to India from overseas (in own account; can’t pay to the seller directly)

2. Loan Facility (in INR) in India for NRIs; up to 80% of the property value based on individual eligibility of the NRI than can be repaid through:

  • Inward Remittance (money transferred into your own account from abroad)
  • Funds in their NRE/NRO/FCNR (Bank) accounts in India
  • Rent from the purchased property
  • Close Relatives crediting the borrower’s loan account (under section 6 of the Companies Act, 1956)

A very important point to note here is that No payments can be made by traveller’s cheque (pre-paid, pre-printed fixed amount cheques for payments across countries) or in foreign currency notes. All payments must be made in India only.

So, till now we have understood what are the various properties under Real Estate that NRIs can invest in followed by How can they invest in these properties. Now, we will circle back to the original doubt that made us explore the above mentioned segments, which is: 

Why should an NRI buy a house in India?

The doubt can be resolved by understanding the benefits of having a house in India. A house can be bought for multiple purposes. NRIs can invest in a house in India with the vision of returning for good and spending their days in India comfortably. Or while they are abroad, an investment in Real Estate in India can help them earn profits till they make any plans of returning back. Let’s discuss the prominent benefits of buying a house in India and the profitability that it can provide:

  • Rental income: A real estate property in India can fetch a very handsome rental income if the property is set in a well established neighborhood. An important point to note here though is that the rent is liable for TDS (Tax Deducted at Source) and the tenant will deduct 31.2% of the rent as tax before sending it to you. In Spite of that, it’s a fair deal and rental income can bring in sizable profits
  • Price benefits and Long term Returns: The Real Estate industry in India appreciates at a rate of 19.5% per year (CAGR 2017-18; Source: IBEF). So, the investment value will multiply exponentially with time and it can be easily labelled as a very fruitful investment. Also, The Real estate sector in India is expected to reach a market size of US$ 1 trillion by 2030 (Source: IBEF). The investment that you put in today will bring in multifold profits in the longer run
  • Retirement Plan: Reverse Mortgage (A type of loan where people over 62 years of age with considerable home equity can borrow money against the value of their home as a lump sum, fixed monthly payment or line of credit.) is gearing up in India. So, NRIs can invest in property and use it as a source of income post their retirement
  • Tax Exemption: NRIs, if you buy property on loan in India, you can claim an exemption on the interest you pay for your home loan (section 24). Under section 80C, you can claim an exemption on the repayment of the principal amount. Also, there are ways to save taxes on Capital Gains from selling out the property in India and much more. To know about Tax Exemption in detail, click here.

You can also opt for Tax Advisory at SBNRI from experts. Follow the button to contact us and visit our website/blog for resolving your queries on Real Estate and a lot more.


So, in this article we discussed what are the various Real Estate properties NRIs can invest in India. How can they invest and what are the prominent benefits of owning a house in India. Next time anyone from your NRI buddies asks you “Why should an NRI buy a house in India?” we hope you can guide them through.

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