Investing in property outside India? Some helpful insight...
With the Indian economy growing at over 7% and annual pay package growing by over 13%, the past few years have left enough income in the hands of working professionals & businessmen, to make them dream of a property outside India. This fact is also confirmed by the real estate consultancy firm Knight Frank. According to the firm around 45% of Indians who buy property abroad are employed professionals. Dubai, London, New York and Singapore are among the most sought after property destinations among Indians.
Though owning a property abroad sounds good, it invites a host of issues. Makaan.com gets you an insight on the mesh of problems one might get into while investing abroad.
Legal and Taxation Issues
1. Indian real estate investors must have a thorough knowledge on the rules of the foreign country. Some countries do not allow purchase of property by a foreigner. Some countries have specified areas where in a foreigner can invest.
2. A resident Indian can remit up to $2,00,000 abroad to buy immovable property without prior approval of RBI (subject to certain procedural compliance)
3. Rental income out of this investment is taxable in India
4. The tax paid in the foreign country will be available as a deduction against the income tax liability of the individual subject to certain specified conditions.
5. Selling off the property in a short duration attracts capital gains tax of 30%, where as the long term capital gains are taxed 20%.
Law makers have not looked at this aspect closely owing to low volume of transactions. To avoid being in trouble the property investor must do a sound research on the location, the property prices in the surrounding areas, the track record of the developer, ROI and the market conditions.