Introduction

For decades, Non-Resident Indians (NRIs) have invested heavily in Indian real estate — both for financial returns and emotional ties to their home country. In fact, NRIs contribute 10–15% of India’s real estate demand, and Bangalore is one of their top destinations. Consistent with broader trends regarding NRI real estate investments, several families also assess long-term lifestyle and portfolio diversification factors when considering NRI purchasing real estate in India.

But investing as an NRI involves more than just choosing the right property. FEMA rules, TDS deductions, repatriation restrictions, and taxation on capital gains all come into play.

This guide is your one-stop resource on how NRIs can invest in Indian property in 2025 — and how Owne’s co-investment model makes the process easier, safer, and more rewarding.

Why NRIs Prefer Indian Property

High Emotional Value → Homes for parents/family, or a base for future return.
Stable Asset Class → Tangible, less volatile than stocks.
Attractive IRRs → Long-term appreciation (5–8% p.a.) plus rental income.
Favorable Currency Dynamics → For NRIs earning in dollars/dirhams, rupee property appears cheaper.
Bangalore Advantage → Tech hub, high rental demand, NRIs form a large share of premium property buyers.

FEMA Rules for NRI Property Investment

The Foreign Exchange Management Act (FEMA) governs what NRIs can and cannot do:

Permitted Purchases: Residential and commercial properties.
Not Allowed: Agricultural land, farmhouses, plantation properties.
Mode of Payment: Through NRE/NRO accounts or inward remittance via banking channels. Cash not allowed.
Joint Ownership: Allowed with another NRI/OCI. With resident Indian, conditions apply.
Repatriation: Up to $1 million per financial year, subject to documentation and CA certification.

These FEMA provisions are fundamental for NRIs buying property in India and are frequently cited in advisory checklists for NRIs looking to invest in Indian real estate.

Tax Rules for NRIs

Rental Income → Taxed at slab rates in India. TDS @ 30% deducted by tenant. NRIs can claim DTAA relief if applicable.

Capital Gains on Sale:
Short-Term (<24 months) → Taxed at slab rate.
Long-Term (>24 months) → Choice of:
• 20% with indexation
• 12.5% without indexation (new regime, 2024 Budget)

Buyer must deduct TDS at 20% (LTCG) or slab rate (STCG) at the time of sale.

Exemptions:
Section 54 → Reinvest gains into residential property.
Section 54EC → Invest in NHAI/REC bonds (₹50 lakh cap, 5-year lock-in).
Section 54F → Sell any other long-term asset, reinvest in residential property.

Example: NRI Selling Flat in Bangalore

Bought in 2015 at ₹60 lakh.
Sold in 2025 at ₹1.2 crore.
Indexed cost ~₹90 lakh → LTCG = ₹30 lakh.
Tax @20% with indexation = ₹6 lakh.
Tax @12.5% flat = ₹3.75 lakh.

The NRI chooses the 12.5% route, saving tax. Buyer deducts TDS upfront, and the NRI files a return to claim a refund if over-deducted.

Common Challenges for NRI Investors

High TDS Deduction → Even when actual tax is lower.
Liquidity Issues → Hard to exit properties quickly.
Management Hassles → Dealing with tenants, society rules, brokers.
Legal Complexity → FEMA compliance, CA certification for repatriation.
Tax Confusion → Choosing between 12.5% vs 20% with indexation.

How Owne Helps NRIs Invest Smarter

Owne’s platform is designed to eliminate these pain points:

Co-Investment Structure → NRIs can invest smaller tickets (₹10–20 lakh), not the full property price.
No Tenant Stress → Buyer occupies the home, removing vacancy issues.
Better IRR → Target 12–15% vs 8–10% in traditional property.
Legal Security → Registered tri-party agreements compliant with Indian law.
Tax Optimization → Exits structured beyond 24 months to qualify for LTCG benefits.
Repatriation Friendly → Proper documentation enables easier transfer of proceeds abroad.

This makes Owne a smarter alternative for NRIs to buy property in India, especially for NRIs seeking flexibility and higher net returns.

Case Study: Dubai-Based NRI

Arun, an IT professional in Dubai, wanted Bangalore property exposure but didn’t want ₹1 crore locked.

Traditional Route: Buy ₹90 lakh flat → Rent ~₹30k/month → IRR ~9% → Tenant issues → High upfront requirement.
Owne Route: Co-invest ₹25 lakh → Earn ₹18k/month + share in appreciation → IRR ~14% → Exit structured at year 7 with LTCG at 12.5%.

He gained higher returns, better tax efficiency, and no management stress.

FAQs

1. Can NRIs buy property on home loan?
   Yes, but repayment must be via NRE/NRO account.

2. Can I repatriate rental income?
   Yes, after paying Indian tax and filing a CA certificate.

3. What is the TDS on property purchase from an NRI?
   Buyer must deduct 20% for LTCG or slab rate for STCG.

4. Can NRIs claim Section 54/54EC exemptions?
   Yes, same as residents.

5. Why is Owne better than buying directly?
   Lower entry cost, higher IRR, no tenant issues, easier tax optimization.

Conclusion

For NRIs, Indian property offers both emotional connection and financial opportunity. But traditional ownership is heavy, risky, and tax-complex.

With the right planning — using exemptions like Section 54, 54F, 54EC, and choosing the right LTCG regime — NRIs can save lakhs in tax.

Owne goes a step further. By offering co-investment in residential property, structured exits, and hassle-free management, NRIs earn better returns with lower effort.

Use our Capital Gains Calculator to check your tax liability, then explore how Owne helps NRIs invest smarter in Bangalore and beyond.