Checklist For NRI Home Loan In India

Did you know that being an NRI, you can avail home loans in India? The RBI norms have made the home loan process and tax deductions simple in order to increase more investments in India.

The process to avail a home loan is simpler these days. It requires the applicant (NRI) to produce certain documents, proofs and meet the eligibility criteria.

Home Loan Eligibility
 

• The minimum age to avail a loan is 21 years

• NRI looking for a home loan should be a graduate

• He/She should have a stable job and should have a minimum income of US $2000 (Rs 1,21,210)

• His/Her EMI (Equated Monthly Installments) cheques have to be routed through his/her Non-Resident External (NRE) or Non-Resident Ordinary (NRO) Account. A savings account in India cannot be used.

• Assets, liabilities and number of dependents are also taken into consideration.

• An NRI can avail a loan ranging between Rs 5 lakhs to a crore depending on the cost of the property and his repayment ability. This requirement may vary as per the home loan institution. A maximum amount of 85% of the construction cost and 75 per cent in case of a plot can be availed as a loan amount.

• The tenure for loan repayment will differ as per the loan amount

Taxes
 
When buying a property in India an NRI needs to be aware of the extra costs and tax deductions that are attached to the property. There is also a certain amount that they can avail as tax rebate on the property bought. Here’s a list of the extra costs and tax deductions that you needs to be taken care of.

Taxes: An NRI has to pay the Stamp Duty and Registration fees for the property that he/she is buying. (Stamp Duty differs in every state) If the foreign country has the Double Taxation Avoidance Agreement (DTAA) with India, then he/she is not bound to pay double taxes.    

Income Tax: If the NRI possesses one property in his resident country and seeks to buy another property in India, then he/she is liable to pay income tax on the Indian property, whether or not the property is up for rent. But, if he does not have any other property, then it becomes income tax free. Again if he has two properties in India one will be treated as a rented house and income tax will be applicable on it.

Service Tax: For an under construction property, a service tax has to be levied on the overseas buyer. Generally, for a flat of 2000 sq.ft, a 12.36 per cent service tax is applicable on 25 per cent of the total price of the apartment whereas, for larger flats the tax rate is 12.36 per cent of 30 per cent of the total price of the apartment.
 
No Tax on Inheritance- If a non-resident Indian gets any property as part of inheritance then tax is not applicable. But if the value of the property is in excess of 30 lakhs after home loan deductions etc, then wealth tax needs to be paid. An exception of Section 5 of the Wealth Tax states that if the numbers of inherited properties in India count to be only one, then he/she doesn’t need to pay tax

Selling The Property- If the NRI wishes to sell off the property then he is bound to pay off the taxes on capital gains as per the Income Tax Act.

Tax Rebate: You can claim a tax rebate of Rs 1.5 lakhs on the income or rent amount and another Rs 1 lakh on principal amount of the loan.

Top 10 Events Of 2014 That Brought Good Luck For Mumbai’s Real Estate

In the year 2013, the real estate market of the Mumbai Metropolitan Region (MMR) showed quite a few ups and downs. However, the year 2014 proved to be a year of advancement for Mumbai. With so many breakthroughs in the infrastructure norms and the revival of real estate sentiments, the year brought nothing but the best for Mumbai. Let us talk about the top 10 events of 2014 that led to the forward movement of Mumbai real estate:

1.     

• The much awaited Mumbai Metro Rail Project finally became operational in 2014. This first line of metro from Versova to Andheri has reduced the traffic to a significant level- on the roads as well as in the local trains.

• The Monorail between Wadala and Chembur also became operational in 2014. Carrying more than two lac commuters, the monorail has been successful in reducing the traffic rabble between these two locations.

• The Navi Mumbai International Airport project is set to take off. The resolution of land acquisition issue between the Project Affected People (PAPs) and CIDCO finally removed the long standing deadlock and the construction work for the airport is likely to start from next month. Nearby localities like Ulwe, Kharghar and Panvel are expected to show significant capital appreciation. Also, Terminal 2 of the Mumbai International Airport was opened last year which enhanced traffic handling capacity of the airport. 

• The civic body of Mumbai designated the Bandra-Kurla Complex, located in suburban Mumbai, as the first smart city.

• The property prices in most of the suburbs of Mumbai saw minimal increase. This gave the property buyers a respite and encouraged them to invest in the upcoming and under construction projects in Mumbai.

• Positive sentiments were recorded in the rental market as well. Malad West, Mira Road Goregaon East, Kandivali East and Borivali West were noted as the most affordable rental destinations in Mumbai. Kharghar, Kalamboli and Vashi came out as popular rental destinations in Navi Mumbai.

• In Boisar, around 4,500 units were launched by Mahindra Lifespaces in the affordable housing segment. This will help big time in solving one of the most detrimental issues of the Mumbai real estate market i.e., affordability.

• The commuting time between the International Airport and Vile Parle was considerably reduced as the Sahar Elevated Access Road from the Western Express Highway was opened to public.

• The bill for Maharashtra Housing (Regulation and Development) Act, 2014 was placed by the government. This made Maharashtra the first state in India to have a regulatory body for real estate sector.

• The cluster development policy for Mumbai was also cleared by the Maharashtra Cabinet in 2014. With this, the cabinet announced that the Floor Space Index (FSI) will remain unchanged.

All these events and reforms imparted positive sentiments in the realty market of Mumbai and it has already started to experience resurgence in demand.

Property Prices In Mumbai Expected To Increase As The Ready-Reckoner Rates Shoot Up

In Mumbai, where property prices are already higher in comparison to other markets, a dream home is becoming a rather expensive dream day by day. The sharp rise in the ready-reckoner (RR) rates set by the government is likely to make real estate in Mumbai more expensive.

Last week, the state government increased the ready-recknon werates, with the highest increase being 30-40% in some of the fastest growing suburbs of the city like Worli and Bandra-Kurla Complex. However, the average hike is between 15-20%. Delhi faced a similar situation in September last year, when the circle rates were increased by 20 percent.

To get a better insight on the consequences of this rate increase, let us understand the concept of ready-reckoner rates in detail:

What are Ready-Reckoner Rates?

Published and regulated by the respective state governments, ready-reckoner rates are set to determine the stamp-duty to be paid to the government for a property transaction, residential or commercial. These rates are revised on annual basis. They differ from state to state and can also differ from locality to locality in the same city. Ready-reckoner rates are known as ‘circle rates’ in Delhi and ‘guidance values’ in Karnataka. The home buyers have to pay the stamp duty on the ready-reckoner value or on the property’s actual value as mentioned in the agreement, whichever is higher.

For example- If the property price mentioned in the agreement is Rs. 75 lac, whereas the ready-reckoner (calculated on carpet area basis) amounts to Rs. 55 lacs, the buyer will have to pay the stamp duty on the property price as it is higher than the RR.

It also has an effect on other taxes like VAT, registration charges and sales tax.

How the Ready-Reckoner Rates affect property prices?

Setting and revising a ready-reckoner rate is important for the governments as a major portion of their revenue comes from stamp duties. An RR rate set for a property by the state government defines its fair value. A ready-reckoner rate, when published by the government, becomes the floor price. And according to the rules of the Income Tax Act, if the property is sold below the ready-reckoner rates, the difference between the selling price and the ready reckoner price is considered as black money. This is why the builders will not sell below this price, nor will the buyers pay less. The differential price is considered as the builder’s business income and also added to the income of the buyer. So, if the seller is an individual, he will have to pay capital gains tax on this amount.

In an upward trending market, the real estate prices are higher than the RR rates. However, in regressive situations like what is prevalent nowadays, high RR can be catastrophic. If the builders in Mumbai and other cities try to maintain the existing profit margin, they will have to increase the price of their product. It will further dampen the demand for real estate.Since the property taxes are also calculated on the basis of these market rates, it is a double whammy for property owners.

5 Best Interactive Activities to Engage Kids in an Apartment Society

Be it a festival or a celebration there is nothing better than seeing kids spending some quality time in creative activity in your apartment society. Often, societies organize activities without keeping in mind the children of the society. Hosting fun and interactive activities for kids in an apartment society is a great way to build a child’s personality and strengthen the bond of community engagement.

Keeping in mind the importance of giving a break to the kids from their hectic schedule devising fun activities which can motivate them can be challenging. Fortunately, there are simple ways to organize fun activities and keep kids in the society busy and content. Here are top 5 activities which fall in this bucket.

Story and Essay Writing-For most kids, literacy begins at home with a crayon. Children should be encouraged to write stories and articles related to contemporary as well as topics of historical importance. The best articles can be published and circulated by the apartment societies as a monthly newsletter.

Sports tournaments-Fewer kids are taking part in sports these days, with television, computer and video games taking precedent in many households. In return, we are getting a generation which is introvert, unhealthy and obese. Simple sports like running, cricket matches, football and badminton matches can be organized to boost their self-confidence.

Planting trees-As kids love getting dirty, gardening and other tree planting activities can be fun. It is educational and kids can learn to appreciate nature around them. Chances are, apart from being just an activity; kids can develop curiosity and learn new landscaping techniques, harvesting and decorating their own garden. Apartment societies need to keep it simple and use light weight easy to handle gardening tools.

Interactive games and Craft sessions-Interactive and craft sessions play an important role in polishing hidden talent in children. Kids should be encouraged to take up drawing, coloring, pottery, origami, collage making which will provide them a platform to showcase their talent and boost self-confidence. Apartment societies can also organize productive activities like candle making, basket and mat weaving for kids which can be later put on exhibition in apartment premises.

Playful and innovative constructions - Literally, everything becomes fun when it is executed in a playful manner. Not many kids know to construct miniature mud playhouses, small animal shelters, so apartment society can organize such sessions and can inculcate learning at an early stage.

HOW & WHEN SHOULD YOU START PLANNING FOR BUYING A HOME?

Buying a home is tricky as you have to work out the payment schemes a couple of years before you actually down pay on property in India. The real estate market has a lot of offers which ease the burden of payment for homes yet you need to think in advance.

There is no fixed age or time as to when you should jump into the property market. If you have the resources, then buying a home is always a good option. Not only does it offer you a sense of belonging and security, but owning multiple homes also acts as an investment avenue. The planning bit is actually more important than simply having the desire to buy a home.

            As soon as you become independent, you should start planning for buying a home. A person’s starting salary is never too high which is why spending it needs to be careful. For instance, if your starting salary is around Rs 25,000 at age 23, then it would take you almost 7 years to be able to buy a house which costs around Rs 50 lakhs or so. To save the amount for down payment, you have three to four years almost.

There are quite a few debt linked savings schemes such as recurring deposits and debt linked mutual funds that are secure and can be pulled out from quite easily. The interest rates offered are healthy and you can save a part of your salary in them. Ideally, you should have 70 to 80 percent of your salary in equity linked mutual funds and have the rest in cash and debt linked plans.

Once you have reached a position to be able to pay the down payment and continue paying the EMI on your home loan, you should start looking around for good home loan schemes. Duration of home loans is usually 20 to 30 years and requires collateral to be deposited with the bank. You can opt for a flexible or fixed interest rate plan depending on the home loan term. The real estate market in India has been modified to the extent that some builders are offering to pay the EMI of your home loan till you possess the property and you should consider such options too. Compare the policies offered by different banks to see which one offers the most competitive interest rate for property in India.

To get your home loan processed quickly, reduce the number of outstanding uncovered loans (personal loans and credit card). Furnishing your CIBIL credit history is a good idea because banks accept it as a sign of a credit worthy customer. If your score is more than 75, then you stand to get swift approval and a good interest rate.

It is better to have a home loan approved in your kitty before you start hunting for properties as it can take a couple of months. Armed with the finances needed, you can start looking for your dream home.