Selling your house back home
Posted on: Fri 23-Mar-2012
Who can an NRI sell a property to?
The NRI can sell it to another NRI; a person of Indian origin (PIO) or to any person resident in India. However, when it comes to agricultural land or a farm house, it has to be sold to a citizen and a resident of India.

Does an NRI need to have a bank account in India for the sales proceeds to be credited? Does one need to have a PAN (Permanent Account Number) card?
A Pan card is definitely required for the registration of the document. If one does not have it, they must apply for one under the NRI or PIO status applicable. At the time of sale, a NRE (non-resident external foreign exchange) or NRO (non-resident ordinary rupee) bank account is required for conducting any transaction. Whether or not the property being sold by the NRI was purchased when the person was a resident Indian or as a non-resident Indian, it has to be credited to an NRO account.

What are the taxes the NRI has to pay on the amount paid on the property?
The sale of a property triggers capital gains tax in India. The capital gains tax on property is assessed as income arising from India and is taxable as it would be in the case of a resident Indian.

The short-term capital gains would be taxed at normal rates, of up to 30 per cent, plus surcharge. The long-term capital gains would be taxed at 20 per cent post indexation for inflation as per the Cost Inflation Index circulated by the Income Tax Department. [Capital gains tax is classified as long term if the property is held for over three years and short term if sold within three years of purchase].

Can the sales proceeds be fully repatriated?
According to Reserve Bank of India guidelines, an NRI can repatriate the sale proceeds outside India, provided the purchase was in accordance with the provisions of the foreign exchange law in force at the time of purchase. The amount to be repatriated cannot exceed:

The amount paid for the purchase in foreign exchange received through normal banking channels, or;
the amount paid out of funds held in a Foreign Currency Non-Resident Account (FCNR), or;
The foreign currency equivalent (as on the date of payment) of the amount paid from funds in a Non-Resident External (NRE) account;
If the residential property was purchased by NRIs with loans from authorised dealers or housing finance institutions, the repatriation cannot exceed the amount of the loans repaid out of the foreign inward remittances received through normal banking channels or by debit from their NRE or FCNR accounts.

If the property was acquired using funds in an NRO account, then the NRIs or PIOs have to credit the sale proceeds to the NRO account. And the amount allowed to be repatriated is limited to $1 million (Dh3.67 million) per financial year out of the balance in the NRO account.

However, if the NRI bought the property when resident in India, the sale proceeds have to be credited to the NRO account and the amount allowed to be repatriated is limited to $1 million per financial year from that NRO account after all tax dues have been paid.

The same rules of tax and repatriation apply in the case of residential property received as a gift or which is inherited.

In the case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties.

Is there any way to get some relief on the capital gains taxes?
If one has long-term capital gains, one can avail tax exemption u/s 54 or 54F depending on whether the property sold was a residential property or land. The capital gains (where the sold property is a residential property) or the sale proceeds (in case of land) have to be re-invested in another residential property.

Alternatively, the funds can be invested in capital gains bonds from an NRO account on a non-repatriable basis.

In the latest Indian budget there is an additional avenue which has opened up: the reinvestment of funds in equity of any manufacturing small to medium enterprise (SME) for the purchase of new plant and machinery. By doing this, the exemption would still be available. Short-term capital gains cannot be re-invested into bonds or another house to save tax.

How long does it take to complete all the transaction formalities?
The dynamics of secondary property sales differ from location to location. Pricing and location are key aspects of all deals. If the location, product and pricing are right, the property can sell in a matter of days. However, if any one of the parameters is not aligned to market conditions, putting a timeline to the sale is very difficult. But, as one expert from Colliers International India says, it could take anywhere from three to six months on an average. Most properties that extend this deadline are either too expensive or have a serious quality issue.

What is the best way to sell property? Selling a property in India would almost always require anywhere from a single exclusive broker to a group of two to three brokers who become key contacts. This ensures adequate market coverage.

However the trend now is to hire one exclusive broker. This increases accountability and the seller must only deal with one point of contact.

However it is essential to do this with known reputed companies which have established track records.

Currently there is no law that regulates the brokerage fee which varies from city to city and within cities. Generally, the lower the value, the higher the brokerage fee.

The average trend is 1-2 per cent. However there have been rare cases when the same has gone up to 3-4 per cent or come down to 0.5 per cent.

Selling through relatives, or advertising yourself is a ad-hoc process that may not generate results or may delay the entire process. The first thing a seller should check is if any existing residents are interested in purchasing the property. This expedites the process considerably.

Does doing up your property help?
Sprucing up the property definitely helps as even the smallest oversights in terms of aesthetic appeal and maintenance can affect the price.

Simple whitewashing and cleaning is generally adequate to help secure a sale.

What kind of documentation needs to be put in place at various stages?
It's critical to have all title papers ready. This would largely entail:

1. Sale agreement (registered original copy).

2. All earlier sale agreements (history of sales).

3. A certificate of a housing society certifying that the person whose name is on it is the rightful owner of the property.

4. Copies of maintenance bills for the immediate three months prior to the sale.

5. A copy of the electricity bill

The process varies from transaction to transaction, but in general:

On agreement of a price and all terms a 10-25 per cent deposit is paid to the seller and an MOU (memorandum of understanding) is entered into;
The copies of the ownership documents are shared with the buyer as required;
A public notice is published in local papers for due diligence;
A final sale agreement is entered into with registration being done simultaneously with the exchange of original documents and the balance of the amount.

Under what conditions do I become an NRI?
If you have not been in India for 182 days or more during the relevant previous year;
If you have not been in India for 60 days or more during the previous year and you have not been in India for 365 days or more during the four years prior to the previous year. (Gulf News)



Welcome to First Gate Business Service

Abscond Reporting | Adding Partner & Removing Partner in LLC Lic | Additional Booklet | Address Change | Affidavit for Child's Passport | Affidavit for Maid Visa-Indian Consulate | Agreements | Annual Leave | Attestation | Ban-1Year | Bank Guarantee Refund | Birth in Dubai | Business Set-Up in Dubai | Branch of a Foreign Company | Cancellation | Certificate Attestation | Change of Address | Change of Name | Change of Spouse Name | Changing Employment & Family Visa without Exit | Cheque Bounce | Children sponsored by mother | Civil Company | Company law | Consulate Procedures for Maid Visa | Consulate Works-Ind | Contracting Lic-Renew | Credit Card Debt | Damaged Passport | Date of Birth Correction Death Cert. Attestation | Death Cases | Death Compensation | DED Fees | DED Services | Dependent sponsorship | Designations | Detach Child from Mother's Passport | DNRD Locations | DOHMS Fees | Driving License | Driving License AttestationECNR | Education Visa | Educational Institution | E-Gate | Ejari-Tenancy Contract Registration | Embassies & Consulates | Emergency Leave |Emirates ID | Emirates ID Lost | Employment ban | Employment Contract-Ind.Consulate | Employment Visa | Employment Visa during Ban | Employment Visa Renew | Employment Visa Stamping-new | Employment rules |E-Signature Card | FAQs-Visa | Family Visa Abu Dhabi | Family Visa-Ajman | Family Visa Cancellation | Family Visa-Dubai | Family Visa hold | Family Visa Renew | Family Visa Sharjah | Family Visa Stamping-After Entry | Fines | Freehold Property Visa | Free Zones | Fujairah Free Zone | General Trading | Gratuity | Housemaid Affidavit | Husband's Residence Visa | Immigration Clearance | Immigration Establishment Card | Immigration Card Renew | Immigration Card Amendment | Immigration Card Lost | Immigration Office | Immigration Services | Important Telephone Numbers | Import Code | Indian Maid- Change Visa inside UAE | India Tourist Visa | Industrial Projects | Inheritance | International Driving Permit | Investor Visa | Investor Visa Stamping | Investor Visa Renew | Investor/Partner Visa Cancellation | IVS Global | Jebel Ali Free Zone | Labour Card Renewal l Labour Contract | Labour Contract FAQs | Labour Contract-New (after entry) | Labour Dispute | Labour Establishment Card | Labour Establishment Card Amendment | Labour Law | Labour Services | Legalization at UAE Embassy | License Cancellation | License Modification at DM | License Renewal - Contracting | Limited Contract | LLC formation | Local Service Agent | Location Change (license) | Loss of Passport | Lost Labour Card | Lost Reporting | Maid from Nepal | Maid from Sri Lanka | Maid Visa-New | Maid Visa Stamping | Maid Visa Renewal | Map of Consulates | Maternity Leave | Marriage Solemnization at Consulate | Media License Medical Facility Licensing | Medical Treatment Visa | Medical Test | Mission Visa | Modify Contractor Regn.-Foreign Co.| MoH & DoH Exams | Multiple Entry Visa | Municipality Activities | Municipality Exam | Municipality Services | Newborn Baby's Passport | Newborn Baby's Visa | New Contracting Lic | NOC for issuance of Passport for Child | Notarization | Notice Period | NRI Certificate | Nursery | Occupational Disease | Occupational Health Card | OK to Board | Online Service | Out Pass | Overtime | Parents Visa-New | Parents Visa Stamping-After Entry | Parents Visa Renew Partnership Agreements | Partner Visa | Part-time Job | Passport in Maiden Name | Passport in Married Name | Passport Lost | Passport Renewal-Ind | Passport Additional Booklet | Passport Validity Extension | PCC Attestation-UAE Embassy Delhi | PCC Dubai | PCC-India | PCC Out of Country | Pharmacist Exam | Pharmacy License | Photo Change | Police Clearance Certificate-UAE | Police Related Services | Power of Attorney | Probation Period | PRO Card-DED | PRO Card -Immig | PRO Card-Labor | Profession Change | Professional Firm | Professional License | Professions | Real Estate License | Registration of Engineer-DM | Re-entry | Removing Partner & Adding Partner in LLC Lic | Residence Visa | Resignation | RTA Related Business Activities | RTA Related Services | Salary Certificate Attestation | Salary Increment | Saudi Visa | Servant Visa | Severance Pay | Sharjah Visa rules | Sole Establishment | Sponsorship Declaration | Spouse Name Endorsement | Status Change | Student Visa | Surrender of Indian Passport | Tas'heel Centers-MOL | Tas'heel Business Center-for DED Services | Tatkaal Passport | Tawasul Card new | Tawasul Card Renew | TC Attestation-Consulate | Teenager Visa | Termination of Contract | Thailand Visa | Theft Car | Tourist Visa | Trademark Registration | Transfer Visa from old Passport to new | Transit Visa | Trade License | Trade License Renewal | Translation | UAE Embassies World-wide | UAE Legal System | UK VisaCentre-Dubai | Umrah Visa | Undertaking for Studies | Unpaid Salary | Validation letter-Driving LicenseVisa Cancellation-Employment |  Visa Cancellation-Investor/Partner | Visa Change-Hatta | Visa for Step-child | Visa on Arrival-Dubai | Visa on Arrival-India | Visa on Arrival-Qatar | Visa Position Amendment | Visas of two countries | Visa Renew-son above 18 years old | Visa Transfer | Visa Transfer-Child | Visa Transfer-wife | Visit Affidavit for Family Member | Visit Visa | Will Attestation | Work in UAE | Work Permit | Work Permit for relative sponsored | more


First Gate Business Service, 5 BF, 5th Floor, Gate 4, Hamarain Centre, Muraqabat, Deira, Dubai, United Arab Emirates
Tel: +971-4-239 7363, Email: