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V Nagarajan: Influx of NRIs has resulted in demand for luxury homes in India
November 27, 2012
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I have leased my apartment to a corporate and it was financed partly out of my savings and the rest through home loan from a housing finance company.  Can the rental income be allowed for repatriation?  Please clarify. Arun Kumar, Sharjah 
Yes. The rental income, being a current account transaction, is repatriable irrespective of the fact whether the property was purchased through forex or otherwise, subject to tax compliance.

However, where the apartment has been purchased partly through home loan and it is rented out, the entire rental income, even if it is more than the prescribed installment, should be first applied towards repayment of the loan.  In case it is less than the prescribed installment, you should remit the amount to the extent of the shortfall from abroad or through your NRE or NRO account in India.

I sold my immovable property in India which resulted in capital gains.  Can I reinvest in buying overseas properties and claim exemption of capital gains under section 54 or 54F like in the case of residents?  Are there any restrictions for NRIs in doing so? Sriram Sabarish, Dubai
The learned judge has observed in the case of Mrs Prema P Shah vs. ITO (2006) (Mumbai) that section 54 does not exclude the right of the assessee, non-resident in the instant case, to claim the property purchased in a foreign country, if all the other conditions laid down in the section are satisfied.

As a result the provision in your case is satisfied with purchase of another unit abroad and nowhere does it mention that the house purchased should be in India.  It can be situated even in a foreign country and there are no restrictions for NRIs.

Is it compulsory to take home loan insurance as some companies are insisting on it?  At what stage it is required?  Please advice.  Upendra, Al Ain.
It is not mandatory for any home loan borrower to take a home loan insurance policy but it is always advisable to reduce the burden in the event of unforeseen circumstances in order to reduce the burden on your family members.  You can take up the policy at any stage and not necessarily at the beginning of the loan repayment commencement.  In case of home loan insurance, the sum assured is not a fixed sum, but it will be equal to the outstanding home loan amount whenever you choose to opt for one.

NOTES:
Circle Rates up in Delhi

Property prices in Delhi are likely to zoom further with the Delhi government hiking the circle rates, the minimum valuation of land and immovable property, by upto 200 per cent to check black money in transactions.

Property prices
Residential property prices in Chennai and Pune have witnessed steep rise in the past four years.  As per the quarterly Residex released by National Housing Bank (NHB), price of housing property in Chennai has gone up by 228.4% and Pune by 107% during July-September 2012, compared with July-December 2008.

Buy or rent

It is better to rent a property than own it in Delhi NCR, Mumbai, Chennai and Bangalore, according to an analysis based on rental and property values across metros by ArthaYantra, an integrated personal financial service firm.  Pune, Hyderabad and Kolkata presented the best opportunities to own a house.

Surge in demand
Influx of NRIs and changing lifestyles have resulted in the demand for luxury and ultra luxury homes in India with a price tag in the range of Rs 10m to Rs 200m or even more in some cases, making a comeback in metros, according to a report by Jones Lang LaSalle (JLL).  The total value of the luxury homes, launched in 182 luxury residential projects, offering 25,570 units across top seven cities of NCR-Delhi, Mumbai, Bangalore, Chennai, Hyderabad, Pune and Kolkata in 2008-2012 was around $30 billion.  This has been fuelled by the presence of around 0.15 million HNIs, whose numbers are growing at a fast rate.

ECB cap for low cost
The special extra-commercial borrowings (ECB) window for low-cost housing will be subject to a cap of $1b to start with.  The detailed norms are likely to be announced soon.  The government earlier had allowed designated housing finance companies and the National Housing Bank (NHB) to access overseas loans for the specific purpose of financing low-cost housing.

 
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The author is a business analyst
covering Indian property markets
 

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