NRI Inheriting Property In India
NRIs generally make a decision to buy or sell property in India. As an NRI, you may be familiar with the rules and regulations regarding investing in property or real estate in India. However, when it comes to inherited property in India, the rules and regulations may be slightly different than ones that apply to you when you’re investing in India.
Most often, the inheritance of your ancestral property is not a choice or a decision made by NRIs. You may be unsure whether you can inherit property in India, and what kind of taxes you may have to pay. The first thing you should know that NRIs, as well as PIOs, are eligible to inherit property in India.
If you are in a situation where you have inherited some property or real estate in India, and you do not know what to do next, then you have come to the right place. We have gathered a comprehensive guide for all NRIs inheriting property in India. We hope this helps make the process of your inheritance much easier than you had imagined.
From Whom Can an NRI Inherit Property in India?
An NRI is eligible to inherit property from a resident of India, and also a non-resident Indian. However, you must make sure that the person you inherit property from has obtained the real estate or property in accordance with the Foreign Exchange Law in place at the time of sale. Your property should have been in accordance with the FEMA regulations present at the time of sale of the property. There is no restriction on the type of property you can inherit in India. This means you can inherit agricultural land, plantations, commercial or residential land, and properties.
Is the Inherited Property Taxable for NRIs?
Your inherited property will attract no income tax. But, you may have to pay a wealth tax on our inherited property. As per the Wealth Tax Act, if your net assets exceed INR 30 lakhs, you will have to pay a wealth tax. Your net assets will be assessed based on the following criteria:
Single Property Owned
If you are an NRI who owns a single residential property in India, then you will not have to pay a wealth tax. If you own more than one property in India, then you will have to pay wealth tax on your assets exceeding INR 30 lakhs.
Property Given on Rent for More Than 300 Days
If your property in India has been given on rent for more than 300 days in the current financial year, then you will be exempt from paying wealth tax. However, you might have to pay income tax on the rental income earned by you.
What are Documents an NRI will need to Complete the Inheritance in their Name?
In order to complete the procedure where the property is officially transferred to your name, these are the documents you would need:
- Will or Succession Certificate: If there exists a Will that grants you rights of succession to property, then it makes the whole process easier. If a Will does not exist, then you will have to procure a Succession Certificate from the court in India.
- Purchase Deed and Registration Documents: These documents are important because they serve as proof that the deceased did, in fact, own the property they are bequeathing to you. In case you cannot find these documents, you will have to get certified copies of the title deed from the jurisdictional registrar’s office.
- Khata: A Khata is an account in the books of your local municipality or Municipal Corporation. It will entail details like the size of the property, built-up area etc.
Can an NRI Rent out Inherited Property in India?
Yes, an NRI can definitely rent out inherited property in India, if he wishes to do so. All the legal and tax implications are the same when you rent out purchased property in India.
Can an NRI Sell Inherited Property in India?
Yes, an NRI is eligible to sell the property they have inherited in India if they wish to do so. An NRI or a PIO can sell a property to a resident of India or an NRI. In case you wish to sell your property to a PIO, then you will have to get a prior approval from RBI (Reserve Bank of India).
Can an NRI Repatriate the Proceeds of Inherited Property from India?
Generally, an NRI will not need permission from the RBI to repatriate proceeds of inherited property from India. However, if you have inherited the property from a person who resides outside India, or if the net value exceeds USD 1 million, then you will have to get a prior approval from the RBI.