May 2018 - S2NRI

Home Loan Assistance to Buy & Sell Property

May 21, 2018 Manoj Sodhani Comments 0 Comment

The price of property is skyrocketing in India. It’s immensely difficult to think about investing in a property through personal finance. There are many reasons behind this fact, like limited monthly income, uncertain expenses etc.. Undoubtedly, funding for home costs an arm and a leg. But still, it’s possible to buy a home. Yes, you can have it through home loan. You don’t need to take out mortgage. Neither do you need to take financial help from your relatives.

There are several home loan possibilities that you can grab on. Catch a cursory look over a few such possibilities:

Home Loan, rather than personal financing:

Do you want to spend your hard earned money somewhere you get higher ROI? It’s an obvious desire if you save a fat amount out of your monthly savings. NRIs, generally, make money in hundreds of dollars every month. For such people, investing in property is a blockbuster idea.

Meantime, taking assistance to buy and sell property would be a better option. Sometimes, personal financing can impose tax. You can come out of the tax-trap through home loan. Apart from saving tax, you can buy a fixed asset that generates rental income.

Flexibility in home loan repayment:

You can purchase a residence even through you’re a salaried employee. Won’t believe? It might be unbelievable but, home loan can make it possible. A few banks, like SBI, provide an option to pay interest only during the moratorium period. Later on, you can pay moderate EMIs. And, if you want, you can request for stepping up EMIs during upcoming years.

Home Loan for retired army personnel:

If you’re a retired army or defence personnel, you can book a home on loan. Whether or not you live in India, you can borrow money to invest in a property. Many banks run lucrative schemes to lure such retired army officers. They facilitate every valid reason to take home loan, like lower rate of interest on loan and easy repayment options. A few home finance banks allow you to pay amount in a long run. SBI’s Shaurya home loan is its best example.

Home Loan for retired government officers:

There are a few NRIs who prefer to settle with their kids abroad after completing their tenure in a government job. They can grab a golden opportunity to invest in a commercial or residential plot in India. Thereby, rental income would generate income for their livelihood.

There are certain financial institutions that facilitate loan to such government officials. Moreover, they offer the same benefits to the personnel of the public banks former officers. Such officers can spend their pension into a home. If the amount is short to pay off the wholesome amount, they can select a bank to borrow home loan.

What they should bear in their mind is the policies of that bank. So, if you’re one of those retired government officers, you should thoroughly go through the guidelines of the financial institution or bank. Some banks approve privilege home loan on the basis of some aspects. They can be your income, repayment potential and age. How many assets and liabilities you own and the cost of the proposed house-that bank would like to know these facts also.

Pre-approval home loan:

Do you consider the cost before going to buy a home? It’s better to analyze prior to make such a big decision. There are a few real-estate agencies and fund providers that sanction home loan limits prior to purchasing any property. This is how you win an option to negotiate with the builder or bank. It would, in return, ask for your income details to assess whether or not it should approve your home loan. However, it probably charges processing fee at the time of sanction.

Tips to Monitor NRIs Property in India

May 10, 2018 Manoj Sodhani Comments 0 Comment

NRI’s problems related to property monitoring:

Do you own a property in India?

It’s a walkover if you live in India. You need not spend hundreds of dollars for visiting your own property. Neither would you worry about the encroachers. However, unscrupulous people tend to seize properties. But, if you make occasional rounds, it ensures that your fixed asset would be safe.

Now, see the property monitoring from the lens of an NRI.

Would he be able to make the rounds of his property now and then? Would he be ready to bear on overhead expenses in thousands of dollars once in a month? If he fails to take care of his property religiously, the day won’t be so far when any land-mafia would take over your asset.

Recently, a shocking incident of an NRI’s property has surfaced the Economic Times. It spotlighted the trauma of the one belonging to the Indian diaspora. A non-resident from Zambia purchased a house in the name of his mother. But, his absence for several years gave his siblings an opportunity to acquire that property. His younger brother constructed it without asking the owner. And, he was unable to take any action against.

Property Inheritance:

However, an expat with an Indian passport is not allowed to invest in any immovable property. But, a relative or friend gifts to it, he can take its ownership. Moreover, he doesn’t need to pay tax as a gifted property is exempt from it. The word ‘relative’ (who can gift the property) includes:

Spouse
Brother/Sister
Brother/ Sister of the spouse
A lineal descendant or ascendant
A lineal descendant or ascendant of the spouse

But here again, you have to take care of that immovable property by self. Otherwise, the aforesaid problems will take a sneak peek. And, you might lose it.

Benefits of Property in India for non-residents:

Loan against rental income:

The non-residents can apply for 5-year loan upfront against the rental income. Or, they can deposit the paper of the real-estate as a security with the bank. In return, the bank would provide them short-term funds in India. Apart from banks, the housing companies do play the same role. Therefore, you would have a golden opportunity to get a loan.

Repatriation up to $1 million:

If you use your property in India for generating rental income, you can repatriate that amount. But, that repatriation would be possible after three-year lock-in period. The lock-in period is the predetermined time.

If it’s generated from an inherited property, you can repatriate up to $1 million in a financial year. There is no lock-in period for this. You don’t need to pay tax. But, you have to provide the documents and certificates attested by the chartered accountant.

Tips to monitor NRI’s property in India:

Are you ready to fight with the encroachers and shady people in India?

Bear in your mind that it’s going to be an uphill battle if you sue from overseas. You can’t visit on every trial. What you can do is to take these steps:

Ask any relative or friend to take care of that property.
Engrave a nameplate.
Go for legal documentation, even if it’s inherited. You must transfer all documents on your name.
Pay taxes to the Municipal Corporation and other authorities. Pay through cheques.
Keep photocopies of those cheques and documents in a safe place.
Don’t empower your attorney with unlimited authority.
Specify which kind of authority you’ve provided to him. Be it for maintenance and protection of that property, mention it subtly.
Don’t provide the authority to sell that property. Neither should you provide the power to agree over selling that asset.

Let’s wrap up!

Being an NRI, you should keep an observer’s eye on your property on a daily basis. However, it’s impossible. But, you can do it with the help of your friends and relatives. Make them attorney, but while restricting their power. Keep all documents of that property, cheques of tax and their photocopies in a safe place.

Social Security – NRI Parent’s Income Source in USA

May 9, 2018 Manoj Sodhani Comments 0 Comment

Senior Citizens in India:

The Ministry of Social Justice and Empowerment stated that India had 103.8 million senior citizens in 2011. This count is likely to rise by 143 million & 173 million senior citizens till 2021 and 2026. The people over 60 years of age, who are called senior citizens in India, would contribute 25 percent to its total population by 2050.

It’s going to be a big challenge for NRIs to prevent them from depression and crime. They would be more vulnerable to these life-threatening causes.

However, it’s not a walkover to combat this challenge. But, the USA government’s Social Security emerges like a silver lining. It helps the NRI to take care of their parents.

You might be thinking how the USA’s Social Security will take care of NRI parents. It sounds a little bit awkward, but it’s true. Let’s have a look over what it is.

What is the Social Security?

It’s a mandatory insurance policy for the old (retired)/disable and surviving people in the USA. According to the Federal Insurance Contributions Act (FICA), the US government derives money from the payroll taxes and self-employment taxes to fund this system.

Every integrated person with this system carries a unique Social Security Number. This number is a key to track record of every beneficiary. American natives hold right to access every bit of information regarding their social security account. The local social security administration office is a competent authority to look into the related matters.

Can Indian Dependent Apply?

Say- you’re 60+ and you want to get benefits of this policy. You won’t get the benefit unless you enrol in this policy. You have to apply, first. If you’re 63 or 63+, your benefits would be more than the one who is 62 years old.

Now, the question arises- are NRI parents eligible to get this benefit?

Answer-Yes, you can be provided that you have earned at least 40 credits under this scheme, or, you have been in the USA for 10 years.

The NRI kids are also covered under this security scheme. If the NRI parents had served at least 5 years, their children can enrol for this security.

Now, you must be thinking about how much money they get.

It purely depends on how much money that the beneficiary has contributed during his tenure as a working person in his life. If it’s more, the size of Social Security would also be more.

What you need to provide to the social security authority?

If you want to enrol your parents under this security, you should submit these details:

Address/Change of Address to notify the authority that the beneficiary lives there with family.
Did business or worked outside-this information is required from the one of 67 years or more who runs business or who has been working outside the USA.
If an NRI child or the native child runs the business, the Social Security authority requires its information. The child’s age won’t be considered then.
If you receive disability benefits and later, recover up & re-join the work, you need to inform the authority.
If you’re married or get divorced, the security amount will be computed accordingly. Notify.
If the beneficiary dies, notify the authority. It will cease the payment and reimburse it of the same month.
In case, you can’t manage the security amount, you can appoint any representative.
You need to inform the authority that you’ve started receiving pension from work or disability pension that is not covered.
Remember that if the beneficiary worked outside, he/she must undergo the foreign work test or annual retirement test. You can get a sneak peek into these tests below.
If you fail to notify the authority, it will automatically freeze your account.

Method of payment:

The beneficiaries receive monthly payment through:

Cheque
Direct bank deposit
Direct Express Debit Card
Annual amount with tax figures.

Foreign work test: The authority throws a test for the applicants who are below 67 and working outside the USA. It accounts for providing dollars for just 45 hours for such apprentices.

Annual retirement test:

This test is for those who are under 67 years and serving outside the country. It evaluates whether or not your income exceeds the annual exempt dollars. If your exempt dollars are 45, 360 in 2018, you’ll be eligible to get it.

Disability perks:

If your disability persists, the security benefits will be all yours. But if you recover and join the work again, the authority will pay for 9 months as a trial work period. Later on, it will add the sum for three more months if you continue the work.

Tax Implications for NRI Property Investment in India

May 4, 2018 Manoj Sodhani Comments 0 Comment

Do you know that you’ve to pay tax if you want to sell or purchase property in India from abroad?

Yes, you have to pay. Before taking any such step, you should know the property investment taxation laws for NRIs. Otherwise, your taxable money would mount a lot.

To get rid of such awkward situation, you should know the taxation policy for the non-residents in India. This blog is written with a view to make acknowledged to you of Indian tax norms. The below mentioned guidelines are strictly meant for selling and purchasing of property of expats with Indian passport.

Let’s begin.

Taxation law if an NRI sells a property:

The selling procedure of any property will be similar for domestic as well as PIOs/NRIs. The amount received from the sale of the property would be taxable. Now, the question arises-will it be taken as a long term capital gain or a short term gain?

Difference between long term and short term capital gain:

Answer-The gain received from the sale of the property would be considered a capital gain. To distinguish whether it is the long term or the short term gain, you should count the number of years from when you purchased it. If you sell it after 2 years or more of its purchase, it would be the long term capital gain. But, if that selling time is less than the said timeframe from its purchasing date, it would be the short term capital gain.

Taxability:

Your gain would undergo for TDS deduction. The Indian living overseas would be subjected to pay 20% TDS if it’s the long term capital gain. The TDS value will scroll up to 30% if it’s the short term capital gain. Therefore, the NRIs should invest in Indian property while keeping these tax implications.

Repatriation:

If you think of repatriation, you can go for it. But, you can repatriate upto $1 million in a financial year. You should have a PAN card. Quote it in the challan-cum-statement in a Form 26QB. This form discloses that you deposit withhold tax.

If you have any doubt or confusion, dispel it with an advocate who deals in the NRI’s property management cases.

Taxation law if the NRI sells an inherited property:

It’s true that non-residents can’t invest in immovable property. But, this law becomes null and void when it comes to inherited or gifted property. You can sell it willingly.

Capital gain:

The capital gain will be computed on the gain on the sale of the property. It will be similar to, as if that property is yours. Therefore, the cost of acquisition would be same for you as of the owner. The cost of indexing should be calculated from the year of purchase by the original property owner.

Capital gain=Sale proceeds-indexed cost of acquisition

If you sell it less than two years from holding that property, it would be short term capital gain. Otherwise, it would be long term capital gain.

Taxability:

After determining the capital gain, you would have to evaluate tax value. If it’s a long term capital gain, the tax would be 20% of the gain. When it comes to the short term capital gain, you should integrate it with your income. And then, you should calculate the tax amount. It differs financial year to financial year. So, you can check the income tax slab for deriving that value.

TDS:

If you want to save your tax, you should show the TDS deduction with the buyer. If it’s a long term capital gain, 20% TDS will be deducted, otherwise, it would be 30%. You should report about it in your country of residence.

Tax Exemption:

You can get off paying tax amount. Show zero TDS to the income tax officer.

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Month: May 2018