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Is it possible to sell property in India if you are a Non Resident Indian (NRI) currently living in the US? The answer is yes, but the real estate process can be cumbersome. Often selling Indian property isn't the hardest part. Getting the funds to the US is tricky, and the sale may have unanticipated tax implications.
Here's a quick guide to the most crucial steps involved in the process of selling a home in India while you are halfway across the globe! – from selling the house property to receiving the sale proceeds.
NRI Selling Property in India - Process Overview
The process of NRIs selling property requires an assortment of documentation and plenty of attention to detail. Here's what you should consider.
Getting the Paperwork in Order Should Be A Top Priority
As the original owner, here's a list of the common documents required to sell a property in India:
1. Passport - This is how you prove your identity for the transaction
2. Tax Returns - You may need to provide tax returns from the time you owned the property if you earned income on it
3. Proof of Address - You must provide documentation of your address in India with things such as telephone or utility bills, life insurance policy statements, or an aahdar card
4. Encumbrance - You must provide a clear encumbrance certificate that shows the property doesn't have any dues to a legal authority
5. Title of the property - Proves ownership and should be in the seller's name
6. No objection certificate(NOC) - showing that the property is not under litigation and it is free from debts (or liens)
7. Occupation certificate(OC) - from the municipal corporation in India
8. Sanction certificate - Needs plan approval
9. Cooperative share certificate- for properties in a society building
10. PAN Card - Seller'sPermanent Account Number(PAN), India's version of the Tax Identification Number
11. Non-Resident Ordinary (NRO) bank account - An NRO is a savings or current account that Non-Resident Indians (NRI) maintain to manage the income earned in India. The sales proceeds from the sale of your property will be deposited in this account as dictated by the Foreign Exchange Management Act (FEMA). FYI: This NRO account may be considered a foreign financial account subject to US FBAR regulations. You'll need to fileFinCEN Form 114if the aggregate value of your investments exceeds $10,000. You may also have to file Form 8938 to satisfyForeign Account Tax Compliance Act (FATCA) requirementsif the value of your investments exceeds this threshold:
- $150K (joint filers) or $75K (single filers) anytime during the tax year
- $100K (joint filers) or $50K (single filers) on the last day of the tax year
What if I Won’t Be in India for the Sale?
If you won't be in India for the sale of the property, you can designate a representative through a power of attorney. Many NRIs opt for brokerage firms to help with the process of selling a property. Some places to find brokerages firms in India include NRI India Services and Brokers ADDA, among others. These firms usually charge 2% of the sales price plus 18% goods and services tax (GST). You may also have to pay for out-of-pocket expenses which include fees for tax consultants and legal services.
Related Article:How To Pick Insurance For Visitors Coming To The US
What Should I Know if I Have Inherited the Property and Am Trying to Sell It?
If you are a Non-Resident Indian, you can sell the property to a Resident Indian without restrictions. If the buyer is a Non-Resident Indian or a Person of Indian Origin (POI), you may need the approval of the Reserve Bank of India (RBI). You are not allowed to sell the property to a foreigner.
If you are an NRI, but you inherited the property when you were a resident of India, you have more control on how to sell, rent, gift, or transfer the inherited property. As an NRI, you will only be subject to the capital gains tax when you sell the inherited property.
Related Article:Do I Have To Pay Taxes On Inheritance From A Foreign Relative?
Paying Capitals Gains Tax is a Must, but There Are Exceptions
As a general rule, when a Non Resident Indian (NRI) sells a property, tax deducted at source (TDS) applies. TDS is a type of tax withheld by the buyer from the purchase price of the property and remits the tax to the Indian government.
For properties held by the NRI for fewer than two years, sales proceeds are treated as a short term capital gain and taxed at 30% by the Income Tax Department in India. Properties held for more than two years will be taxed at 20% plus applicable surcharge and cess. Cess is a tax for a specific purpose charged on top of the applicable tax. For 2018-19, applicable cess is 3%, so long term capital gains tax rate becomes 20.6%.
The seller will receive the sales proceeds net of the TDS and receivesForm 16A or TDS certificatefrom the buyer. You can cross-check the tax credit for taxes deducted at source throughForm 26AS.
You may apply for a deduction at lower rates or no deduction of tax from the Assessing Officer of the Income Tax Department. If the officer determines the request to be justified, you will receive a certificate for a lower tax deduction or non-deduction of tax.
You may also beexempted for paying long-term capital gains under a provision called Section 54if you use the proceeds to buy a property or invest in certain bonds.
Take note that NRIs are only liable for taxes on capital gains. Since TDS is based on the sale price, there are instances where TDS is higher than the NRI's tax liabilities. For instance, if you sold the property at a loss but the buyer already paid the TDS, you would have a zero tax liability and you may be able to ask for a refund to claim the TDS you paid.
If this happens, you'll need to request a refund from the Income Tax Department.
Related Article:Remitting Money Across Borders? What You Need To Know
Sales Proceeds Have to Be Paid in India, and Repatriating Funds Can Be Tricky
After selling the property, you need to get 2 certificates from a Chartered Accountant in India if you are sending the proceeds outside the country. These certificates are Form 15A Declaration of Remitter and Form 15CB Certificate of an Accountant. You need these forms to verify that your money is from legal sources and that all taxes have been paid.
Some banks will also request additional documents, such as the sale documents or the will for the inherited property.
As a general rule, you can transfer a maximum for $1 million from your NRO to a US account in a financial year, which is from April to March in India. This limit applies if you inherited the property or purchased it from funds from your NRO account. You need the approval of the Reserve Bank of India before you can remit funds exceeding the $1 million limit.
You will need to get the special permission from the Reserve Bank of India if the property was inherited from another NRI.
US Tax Implications of Your Property Sale In India
If you are a US resident alien, you need to declare Capital Gains on Losses on the sale of your property in India under Section D of Form 1040. You can deduct the amount paid for gains tax paid in India to the capital gains tax owed to the US government since the two countries have a Double Taxation Avoidance Agreement.
If you did not pay capital gains tax in India because you reinvested the proceeds, you would still be liable for the full amount of the capital gains tax due in the US if you are a US resident.
Related Article:How Much Money Can I Bring Into The US On A Plane?
Expert Advice Recommended
Selling properties usually have tax consequences, and a foreign property adds another layer of complexity. For tax purposes, it's better to sell properties from January to March. India's financial year ends in March, while US taxes follow the calendar year.
Each sale is unique, so tax implications and other issues could also differ. So, before deciding when to sell, consult an expert to see possible tax remedies and bring transaction costs down. With different authorities involved, we suggest having a Chartered Accountant in India and a financial and tax advisor like MYRA in the US to assist you through the process of going from owner to previous owner.
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India Property for Sale FAQs
Indian Citizens permanently residing in the US and looking to sell property in India may have a few more questions. Check them out here.
Can A NRI Sell Agricultural Land In India?
If you have land for sale in India, you may only sell it to a resident of India. NRIs are not allowed to purchase or own agricultural land in India. However, if you purchased the land while you were a resident of India, you may sell it as an NRI, but only to Indian residents.
Are There Websites That Can Help Me Sell Property In India?
If you're selling residential or commercial property in India, there are many house buying websites you can use to list it to make the sale of commercial and residential property easier.
- 99Acres
- NoBroker
- MagicBricks
NRI Sell Property in India
Selling a property in India as a non-resident can be complicated because you aren't there, but knowing the requirements can make it easier. Gathering your documents, understanding the tax implications, and having professional support is the key to successfully selling property in India.
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FAQs
If you are a Non-Resident Indian, you can sell the property to a Resident Indian without restrictions. If the buyer is a Non-Resident Indian or a Person of Indian Origin (POI), you may need the approval of the Reserve Bank of India (RBI). You are not allowed to sell the property to a foreigner.
Can a US citizen sell property in India? ›
A NRI is permitted under Reserve Bank of India (RBI) rules to sell a property they own in India. There are restrictions about who they'll be able to sell properties and land to¹: Most properties can be sold to a resident of India, or another NRI.
Can I sell my land in India from USA? ›
A non-resident Indian (NRI) can sell their residential or commercial property to either an Indian Citizen or another NRI. The same goes for any foreign national such as UK, USA or Canadian citizens who may have inherited Indian property and now wish to sell their Indian assets.
Can I sell property in India and bring money to USA? ›
NRIs are allowed to repatriate or bring their sale proceeds of property sold in India to the US. However, the limit to the amount brought from India is $1 million per calendar year, including all other capital account transactions.
Can US citizen with OCI sell property in India? ›
Q. Can an Overseas Citizen of India (OCI) card holder or NRI buy/sell real estate in India? A. As per the guidelines issued by Reserve Bank of India, an NRI or OCI card holder can invest in any residential or commercial property.
Do we need OCI card to sell property in India? ›
Yes. OCI Cardholder is at parity with Non-Resident Indians (NRIs) towards property transactions. As per FEMA, RBI frames the Directions / Regulations concerning the Acquisition and Transfer of immovable property in India.
Is property sold in India taxable in US? ›
That means any gain from selling your primary residence overseas is usually tax-free, as long as you meet the occupancy requirements and your gain is below these thresholds: $500,000 – if you're married filing jointly. $250,000 – if you use any other filing status.
How do NRI sell property in India? ›
An NRI can sell his/her residential or commercial property to either a person residing in India, another NRI or a person of Indian origin (PIO). One can also mortgage the property to an authorised real estate dealer or a financial institution dealing with home loans.
Do I have to pay tax if I sell my land in India? ›
When you sell a property, be it a home or land, you have to pay capital gains tax on the same. Capital gains tax is of two types- Short-Term Capital Gains (STCG) for a property held for less than 36 months and Long-Term Capital Gains (LTCG) for above 36 months.
Is money transferred from India to US taxable? ›
No, the money transferred to US from India is not taxable. But, if it exceeds US $100,000 for any current year, you must report it to the IRS by filing Form 3520. This is just an informational form with no taxes payable. However, if the money is in form of gift, gift taxes in the US may be applicable.
You will have to make a power of attorney in favor of a trusted individual who can do the sale on your behalf. To execute a valid POA, the document must be notarized by a local Notary Public, legalized by the relevant Indian Embassy/Consulate, and then registered in India with the local land registration authorities.
What is the maximum limit for money transfer from India to USA? ›
How Much Money Can Be Sent to the U.S.?
| Account Type | Remittance Limit |
|---|
| Indian Resident | USD 2.5 lakh per financial year |
| Non Resident External (NRE) Account | No limit |
| Non Resident Ordinary (NRO) Account | USD 10 lakh per financial year |
May 1, 2023
Reporting the Sale of a Foreign Home
The U.S. taxes you on any income you earn, whether it's earned in the U.S. or another country. So if you owned a home or property in another country, and then sold that home for a profit, you'll need to report the sale just as you would if it were located in the U.S.
What are the disadvantages of OCI card? ›
One of the major drawbacks is that you must surrender your Indian passport as India doesn't accept dual citizenship. Still, this is a chance for Indians living and working abroad to return to their origin. They can enter India with the OCI card without any issues, and have all the rights any permanent resident has.
How long a US citizen can stay in India with OCI? ›
A PIO cardholder is required to register with local Police authority for any stay exceeding 180 days in India on any single visit whereas an OCI card holder is exempted from registration with Police authority for any length of stay in India.
Can US citizens have Aadhar card in India? ›
YES. An NRI (whether minor or adult) with a valid Indian Passport can apply for Aadhaar from any Aadhaar Kendra. If your passport has the name of your spouse, then it can be used as Proof of Address for them.
Can I sell property with OCI? ›
According to the latest rules regarding the OCI cardholders, Indian origin people who moved out from India for employment or business, NRIs with foreign citizenship, and OCI (Overseas Citizenship of India) cardholders are not allowed to buy and sell properties in India.
What happens if an NRI buys a property in India does he need to pay property tax? ›
If an NRI buys an immovable property in India from a resident, he must deduct TDS at 1%, if the sale consideration value exceeds Rs 50 lakh. On the other hand, if an NRI purchases a property from a non-resident, and if long-term capital gains (LTCG) are applicable, then TDS deduction should be at 20%.
Do OCI holders need to pay tax in India? ›
Any Persons of Indian Origin (PIO), Overseas Citizens of India (OCI), or Foreign Citizens have to pay income tax and file an ITR if they have been a resident for more than eighty-two days. OCI card holders get to claim tax benefit as well. Indias follows a 'Residency'-based taxation system.
What happens when a US citizen sells property in India? ›
If you are a Non-Resident Indian, you can sell the property to a Resident Indian without restrictions. If the buyer is a Non-Resident Indian or a Person of Indian Origin (POI), you may need the approval of the Reserve Bank of India (RBI). You are not allowed to sell the property to a foreigner.
In India, the Long Term Capital Gains (LTCG) tax rate on the profit earned from the sale of a property is 20%, which the seller is required to pay.
Do I need to declare foreign property to IRS? ›
Yes, you must report foreign properties on your U.S. tax return just like you would report any owned U.S. property. To do that, you first need to know what type of ownership you have because it affects what tax forms you must file.
How NRI can sell property in India without visiting India? ›
An NRI can sell property anytime but he or she will need some documents like:
- Title of the property (which is in the seller's name)
- Occupation Certificate from the municipal corporation in India.
- Sanction Certificate.
- Cooperative share certificate.
- Seller's PAN.
- Non-Resident Ordinary Bank account.
Documents Required for NRI to Sell Property in India
- Identity Proof: Passport, OCI card if applicable.
- Address Proof.
- PAN Card.
- Title Deed (in the seller's name)
- Older Title Deeds (if any)
- Updated Encumbrance Certificate.
- Mutation Extracts (also known as Khata, Pokkuvaravu etc.)
- Tax Receipts (building tax & land tax)
Gifted land can be sold or not? Yes , you can sell a gifted property if you have received the property via a registered gift deed transfer. Once the property is transferred in your name, you have the right to sell it.
Can I sell land for cash in India? ›
Receiving cash for sale of immovable property is illegal. It does not matter if you register it with correct amount or you deposit it in bank account.
What happens if property tax is not paid in India? ›
Non-payment of property tax can lead to legal actions by the municipal authorities: such as issuing notices, imposing fines, auctioning the property to recover the unpaid tax amount.
How much money can be transferred from USA to India without tax? ›
The IRS has no limit on how much money you can send to India. However, above $11.7 million USD, you'll be liable for taxes.
Is NRI income in India taxable at USA? ›
According to Article 15 of the DTAA, a person who is a particular country's resident but has income from a foreign country source, his income would be taxed 'only' in the residential country. This means if an NRI works in the US and his income comes from an Indian source, he has to pay only US taxes.
How much money can NRI transfer to India in one year? ›
As of the financial year 2021-2022, the LRS limit for NRIs is INR 2,50,00,000 per financial year. This limit applies to the total amount of funds transferred by an NRI during the financial year, and includes all transfers made for any purpose, including investments, gifts, and personal expenses.
Yes, such a Power of Attorney will be acceptable in India. However, it will depend on the state-to-state basis as each of the Indian states have a separate and distinct procedure. The general process is a specific Power of Attorney that will first have to be executed and attested by the Indian consulate in the USA.
What documents do you need to sell a property in India? ›
Whether it is a new property or an old house, you need to take care of the following documents.
- Sale deed. ...
- Building plan. ...
- Encumbrance certificate. ...
- Completion Certificate. ...
- Occupancy Certificate. ...
- Tax receipts and utility bills. ...
- No-Objection Certificate (NOCs) ...
- Succession Certificate (if you are selling an inherited property)
100 is applicable if the Power of Attorney given without consideration in the name of the father, mother, brother, sister, wife, husband, son, daughter, grandson or granddaughter or a near relative. In any other case, the registration fee is payable at the rate of Rs. 10/- per Rs. 1000/- with a minimum of Rs.
How much money can you transfer internationally without being reported? ›
How much money can you wire without being reported? Financial institutions and money transfer providers are obligated to report international transfers that exceed $10,000. You can learn more about the Bank Secrecy Act from the Office of the Comptroller of the Currency.
How much money can NRI transfer out of India? ›
How much money can an NRI repatriate out of India? An NRI can freely transfer without any upper transaction limit from NRE and FCNR accounts. On the other hand, an NRI can remit only up to 1 USD million out of the balances of an NRO account, provided they meet the eligibility criteria. 2.
Do I have to pay tax in India on money transferred from overseas? ›
income tax in India. The foreign income i.e. income accruing or arising outside India in any financial year is liable to income-tax in that year even if it is not received or brought into India. There is no escape from liability to income-tax even if the remittance of income is restricted by the foreign country.
How do I sell international property? ›
Six steps to selling property abroad
- Choose the right time to sell. As with any investment, you'll want to sell at a time when you can maximize profits. ...
- Work with a real estate agent. ...
- Prepare your documents. ...
- Wait for someone to make an offer. ...
- Sign the sales contract and pay any fees. ...
- Report your sale to the IRS.
About Form 8938, Statement of Specified Foreign Financial Assets | Internal Revenue Service.
How does foreign property affect U.S. taxes? ›
If you sell your foreign home, the tax treatment is similar to selling a home in the U.S. If you lived in and owned the property for at least two of the last five years, it qualifies as your primary residence. You you can exclude up to $250,000 of capital gains (or up to $500,000 for married taxpayers) from the sale.
How long does OCI expire? ›
OCI card is required to be re-issued each time a new passport is acquired by the cardholder up to the age of 20 years. OCI card is required to be re-issued once on acquiring a new passport after completing 50 years of age.
Overseas Citizenship of India (OCI) is a type of immigration status granted to a foreign national of Indian origin. The OCI card can be used to legally live and work in India indefinitely.
What is the alternative to OCI card? ›
We have compiled a list of solutions that reviewers voted as the best overall alternatives and competitors to OCI, including Docker, IBM WebSphere Hybrid Edition (Application Server & Liberty), Oracle Cloud Infrastructure Compute, and Virtuozzo.
Can US citizens with OCI own property in India? ›
Q: Can OCI card holders purchase property in India? A: OCI card holders can purchase residential and commercial properties in India. But they are not permitted to purchase agricultural land, including farmland or any kind of plantation property.
Can I be dual citizen of US and India? ›
Constitution of India does not allow holding Indian citizenship and Citizenship of a foreign country simultaneously.
Can OCI buy property in India without Aadhar card? ›
As per Rule 114C, it is not necessary for an NRI to have an Aadhar card while buying or selling a property. He or she will just need to have an NRO account. So an Aadhar card for NRI with OCI is not at all mandatory. Just get your property documents verified by a legal expert for extra safety.
Can US citizens with OCI apply for Aadhar? ›
OCI Cardholders who stay in India for a long time (over 182 days in twelve months immediately preceding the date of application for enrolment) and have an Indian address can also enroll for Aadhaar Card in India.
Can Aadhar be made in USA? ›
There are no Centres in the USA or the rest of the word(outside India) because Aadhar Card for NRI, PIO, OCI is not Compulsory. According to the UIDAI policy, you must have stayed in India for more than 182 Days over the past 12 months to become eligible for the Enrolment of your Aadhar.
How can I sell my property in India with US power of attorney? ›
You will have to make a power of attorney in favor of a trusted individual who can do the sale on your behalf. To execute a valid POA, the document must be notarized by a local Notary Public, legalized by the relevant Indian Embassy/Consulate, and then registered in India with the local land registration authorities.
Can overseas citizen sell property in India? ›
Foreign Nationals of non Indian origin who have acquired immovable property in India by way of inheritance with the specific approval of RBI can not transfer such property without prior permission of RBI.
Can a non resident sell property in India? ›
In this blog, we would venture into the various aspects of selling a property by an NRI. An NRI can sell his/her residential or commercial property to either a person residing in India, another NRI or a person of Indian origin (PIO).
Yes, you must report foreign properties on your U.S. tax return just like you would report any owned U.S. property. To do that, you first need to know what type of ownership you have because it affects what tax forms you must file.
Is US power of attorney valid in India? ›
Yes, such a Power of Attorney will be acceptable in India. However, it will depend on the state-to-state basis as each of the Indian states have a separate and distinct procedure. The general process is a specific Power of Attorney that will first have to be executed and attested by the Indian consulate in the USA.
How can an NRI sell property in India with power of attorney? ›
As per the Registration Act, 1908, whenever an NRI sells or purchases a house property, both parties must be present physically while registering the transaction. If the buyer or seller is not present to sign the documents, a trusted person can be appointed as the Power of Attorney.
How to get power of attorney for NRI to sell property in India? ›
The Process To Execute Power Of Attorney
The POA may be signed by an NRI in India at the Sub-office. Registrar's The POA must, however, be printed on paper and stamped with a non-judicial stamp costing Rs 100. Additionally, two attorneys and two witnesses would both need to sign the deed.
When an NRI sells property in India? ›
When an NRI sells property, the buyer is liable to deduct TDS @ 20%. In case the property has been sold before 2 years(reduced from the date of purchase) a TDS of 30% shall be applicable. NRIs can claim exemptions under Section 54, Section 54 EC, and Section 54F on long-term capital gains.
Can I sell my gifted property in India? ›
Yes, a gifted property can be sold if it is a registered gift deed in the name of the receiver.
Can an NRI sell property in India without visiting India? ›
A Non-Resident Indian (NRI) can sell his/her residential or commercial property to either a Resident Indian, another NRI or a Person of Indian Origin (PIO). Such transactions do not require any special permission from the Reserve Bank of India (RBI).
What does NRI need to sell property in India? ›
Required Documents For Selling a Property In India Owned By An NRI
- Passport – his legal document serves as proof of identity for the party conducting the transaction.
- PAN Card – This document is necessary if you want to file for a tax-exempt status certificate after you buy a property.
