The availability of cheap finance is driving demand for real estate. The home loan market in India consists of lenders that include state-run banks, private banks and housing finance companies (HFCs). All these are trying to woo customers. Leading HFCs are now offering tailor-made affordable housing schemes at 8.5–9%. Borrowers can get a higher loan-to-value (LTV) ratio as well. They can avail up to 85% for housing units that are ready or nearing completion.
Most Non-Resident Indians think a lot before investing in property in India and most of the time put off the plan due to the effort, the research and the planning involved. That’s exactly where the role of investment advisor like #ANP Holding comes to light.
Loans are offered to NRIs against NRE (Non-Resident External) deposits. Loans to NRIs are also provided against FCNR (Foreign Currency Non-Resident) deposits.
According to housing finance companies and banks disbursing home loans to NRIs/PIOs, there has been a sudden surge in demand for residential property across Indian cities and particularly for Tier-II cities. Popular property portals claim that the number of queries from NRIs has surged nearly 15-20 percent over the last two-three months.
Another factor that seems to favour NRIs is the foreign direct investment policy that permits up to 100% FDI from foreign/NRI investors under the automatic route has boosted NRI confidence.
Easy interest rates on housing finance and the improved lifestyle that developers have created have enabled NRIs to acquire property not only for investment but also for personal use.
The response to the real estate market has been so encouraging from the overseas community that it has prompted housing finance companies to set up branches in countries where there is a high NRI concentration.
ICICI Bank, Sundaram Home Finance Limited, LIC Housing Finance, HDFC, CanFin Homes, Citibank and a host of other scheduled banks are vying for lending opportunities to NRIs.
Since most of the NRIs have some investment in India and they also have some additional incomes, it makes sense to know how much tax you save by taking home loans for buying property in India and repaying them.
In general, the tax benefits of home loans are same for both resident and NRI taxpayers.
Income tax law in India allows deduction on both principal and interest repayment of the home loan. So, if you pay income tax in India and also have taken a home loan for buying property in India, you can avail following tax benefits to reduce your taxable income and pay fewer taxes by being in lower tax slab rate.
If the salary earned abroad is the only source of income, an NRI does not have an opportunity to claim tax exemption on home loan repayment, since he is not taxable in India. But, in case if an NRI earns an additional taxable income from India apart from the salary earned abroad, then he is eligible to claim tax exemption for the home loan repayment.
However, the final decision on whether the time is right to buy a house, whether to use one’s own funds or to take a loan, whether to go for an independent house or an apartment and which home loan provider to use must be made by the NRI himself/herself after careful analysis. Service provider for the same field as #ANP Holding extends its expert advice for the same.