For many Indian professionals in the UAE, buying property back home is both an emotional and financial goal. The good news: RBI and FEMA are relatively NRI-friendly on property. The nuance lies in the source of funds, the type of property, and how you eventually bring money back.
What NRIs can and cannot buy
| Property Type | Permitted? | RBI Approval? |
|---|---|---|
| Residential apartment/house | Yes | Not required |
| Commercial property | Yes | Not required |
| Agricultural land | Not permitted (unless inherited) | Required for purchase |
| Plantation / Farmhouse | Not permitted (unless inherited) | Required for purchase |
Funding the purchase — source of funds matters
The source of funds used to buy property determines your repatriation rights later:
- Funded from NRE account / foreign remittance: You can later repatriate the sale proceeds (up to original cost + capital gain after tax) abroad without limit, subject to annual USD 1M cap from NRO.
- Funded from NRO account (India-sourced income): More complex. Repatriation rules apply from NRO account — up to USD 1M/year with CA certification.
- NRI home loan: Repayment must come from NRE/NRO account or inward foreign currency. You cannot repay from a resident Indian's account on your behalf (except close relatives under specific conditions).
Practical advice: Keep your purchase funding chain clean — NRE account → Indian bank account → property. This makes repatriation straightforward when you eventually sell.
Capital gains tax when selling
- Long-term capital gain (LTCG) — Property held over 2 years: 20% tax after indexation benefit (cost adjusted for inflation using CII index).
- Short-term capital gain (STCG) — Property held under 2 years: taxed at your applicable income tax slab rate.
- TDS for NRI sellers: The buyer must deduct TDS at 20% of the sale value (not the gain) before paying you. You file an ITR to claim a refund if actual tax is less than TDS.
Section 54 of the Income Tax Act allows reinvestment of LTCG into another residential property or capital gains bonds (54EC) to save tax — this applies to NRIs as well.
Repatriation of sale proceeds
When you sell and want to bring money back to UAE:
- Collect sale proceeds in your NRO account.
- Pay capital gains tax and obtain proof of payment.
- Obtain Form 15CA/15CB (CA certification) for the transfer.
- Instruct your Indian bank to remit to your UAE bank — up to USD 1 million per financial year.
Calculate your NRI home loan EMI →
Frequently asked questions
Can NRIs buy residential property in India?
Yes — NRIs can freely purchase residential and commercial properties in India without any RBI approval required. The only restrictions apply to agricultural land, plantation property, and farmhouses, which require RBI permission.
Can an NRI get a home loan in India?
Yes — Indian banks offer NRI home loans with standard EMI structures. The loan-to-value (LTV) ratio for NRIs is typically 75–80% (compared to up to 90% for residents). Repayments must come from the NRI's NRE/NRO account or via inward foreign exchange remittance.
How can an NRI repatriate property sale proceeds?
NRIs can repatriate (bring back abroad) property sale proceeds subject to FEMA rules: up to the cost of original acquisition (funded from NRE/foreign currency), through an NRO account with Form 15CA/15CB, up to USD 1 million per financial year after paying applicable capital gains tax in India.
What taxes does an NRI pay on property in India?
NRIs pay capital gains tax on property sale — 20% LTCG (with indexation) if held over 2 years, or income-tax-slab rate for STCG (held under 2 years). A buyer purchasing from an NRI must deduct 20% TDS on the sale value (not gain). NRIs can file ITR to claim refund if actual tax is lower than TDS deducted.
Can an NRI give Power of Attorney to someone in India to manage property?
Yes — NRIs commonly grant a registered Power of Attorney (PoA) to a trusted family member or representative in India to handle property transactions, rent collection, and maintenance. The PoA must be notarised in UAE and apostilled for use in India.