NRI’s guide to selling property in Delhi

How Can An NRI Sell His/Her Property In Delhi

An NRI can sell their home or property in Delhi to any Indian citizen, another NRI, or someone who is of Indian descent (PIO). Another option is to mortgage the property to a financial organisation that offers home loans or an authorised real estate broker. The property can only be sold to an Indian citizen who resides in the area if it is agricultural land or a farming development.

In case the property has been inherited from an Indian resident, no special permission is required from the RBI but on the other hand, if it has been inherited from someone who is not of Indian origin, the NRI will need to seek permission from the Central Bank. Income arising from the transfer of property is taxed under Capital Gains and rental income from letting out the property is taxed under the head ‘Income from House Property. The capital gain is calculated as the difference between the sales value and indexed cost of purchase.

The process of selling a property owned by an NRI in India is as follows:

1. Engage a brokerage firm, you can consider Khatu Shyam Builders (Delhi)  to do a thorough appraisal of the property and establish its value.

2. Complete all of the paperwork required for the property sale. If one is not physically present, one can provide Power of Attorney (PoA) to a reliable individual to carry out the necessary tasks.

3. Recognize your tax obligations. Whether or not the sale amount has been received in full, capital gains are taxed in the year that the property is transferred.

4. The taxation details have been explained in brief below:

  • Short-term capital gains tax is applicable if the property is sold within two years of the purchase date (down from three years following Budget 2017), while long-term capital gains tax is required if the sale occurs beyond two years.

  • Short-term capital gains taxes are determined by a person's income bracket.

  • Long-term capital gains are subject to a set 20 per cent tax rate.

  • The buyer of a property from an NRI who is a resident of India is required to deduct TDS at a rate of 20% on long-term capital gains (LTCG). If the property is sold before two years, 30% TDS will be subtracted. Before deducting the TDS, the buyer must get a TAN (Tax Deduction and Collection Amount Number).

When determining whether a capital gain is long-term or short-term when a property has been inherited, the date of purchase by the original owner is taken into account. In this scenario, the cost of the property would be what the prior owner spent on that specific piece of property.

  • TDS is subtracted from the amount made to the NRI. The selling agreement between the NRI seller and the buyer must include all relevant information about TDS and its rate.

  • Only FCNR or NRE/NRO accounts are permitted to receive the money.

  • If the NRI reinvests the property's capital gains in another piece of property or tax-exempt bonds, they are not subject to taxation.

Documents required by NRI for selling property in India:

  • Passport: It acts as identification for the person conducting the transaction.

  • If one intends to apply for a tax exemption certificate following the sale of the property, a PAN card is necessary. NRIs from a few countries are given PAN numbers that contain the address of their foreign residency.

  • Tax Returns—If the NRI has been profiting from the property, tax returns for the time the NRI owned the property should be readily available.

  • Address Proof: Both domestic and international addresses must be supported by documents. Ration cards, phone and power bills, life insurance policy statements, aadhar cards, and other documents fall under this category.

  • Sale Deed: A sale deed is a contract that binds the parties who are purchasing and selling a piece of real estate.

  • Documents from the society are required to vouch that the vendor has made the necessary payments to the organisation. The assignment letter grants the owner of the property or flat official authority, and an occupation certificate certifies that the apartment has been occupied.

  • Encumbrance Certificate: A certificate of encumbrance is required to confirm that the property is free and clear of any debts to authorities

Why Khatu Shyam Builders;

If you are an NRI and you want to sell and purchase property in Delhi, you can contact Khatu Shyam Builders for better deals.