NRI Property Management Services

Why Should You Hire a Property Monitoring Company?

October 6, 2021 Manoj Sodhani Comments 0 Comment

Property management or monitoring refers to leveraging the expertise of operating, proactively controlling, maintaining and overlooking the real estate or any physical property that is residential, commercial and land real estate. It’s similar to business management practices.

Now-a-days, people hire any third party professional to expertly perform all of the foresaid duties and responsibilities with a complete accountability. They want their assets to be cared as if these are their own. In essence, it represents a complete cycle of managing your land or fixed asset.

Licencing Service

Property management services are a licencing job in many countries like Australia, USA, Canada, Germany, British Columbia and many other nations. On the flip side, there are countries like India where this practice is not legally regularized properly.

Where it is legally regulated, the property assistant companies and agents have to apply for the licence to pursue working in this domain. It ensures that the assistant is well-prepared for taking challenges in this field. So, it’s essential to get registered as a land agent where it is a part of legislation.

Main Property Management Practices

This practice involves the following processes:

Property evaluation
Rental property
Handling tenant inquiries
Screen applicants
Select suitable tenants
Draft a lease agreement
Conduct inspection
Move the tenant into property
Collect rental income
Coordinate any maintenance issues
Supply financial statements to owners
Take care of property taxes on-time

Why to hire a property management company?

Here is the roundup of the reasons for hiring a property management company or agent for caring & managing it:

Tenancy management

Screening the tenant’s records, collecting rent, sorting conflicts or disputes and resolving matters between tenants and other people cover all responsibilities of a property manager. Since it’s a job of intense patience, he needs to be friendly, calm and gentle in administering these concerns quickly.

Meeting odd hour essentialities

There might be a possibility of requiring property keys or any other essential things like water blockage or shortage during odd hours. The tenants may be caught up in the problem and hence, need the assistance to get off the problem. Circuit breakdown is one of the most commonly seen problems that often trouble tenants. The efficiency agents mark their availability during the need.

Legal support

Legal support is mainly concerned with non-residents because an experienced property management agent can get them through any legal hassles in no time. He is professionally trained in tackling these legitimacy barriers, such as evicting tenant in the pursuit of due amount of rent. They are also capable of offering legal and liaison services to ensure that the administration of the owner’s property is in the right hand.

Maintaining property

The most obvious reason to hire a property management company is to timely repair and maintain owners’ fixed asset. The renovated or fully furnished property easily attracts potential tenants who become ready to pay the desirable amount as a rent. So, it’s worth to have an expert on your side that is able to take the charge of meager cracks filling to plumbing requirements.

Professionally managing daily needs

Sometimes, tenants may have to suffer on and off delivery of commodities or groceries at the doorstep. These unpunctual services can annoy tenants and they may think to shift. So, some property managers come out handy while handling this issue by using his good contacts with reputed vendors, retailers or suppliers.

Put efforts in finding the best-fit tenants

The innovative and effective digital marketing strategy can appear in a great role when it comes to accommodating any property with tenants. With social media and search engine local ads, the manager can effortlessly invite tenants at the best rental amount. Here, he can leverage on the cosmetic enhancements of the place in the ads that maximizes the rental income.

Tax assistance

Managing property tax is a challenging job, which the experienced property management companies can easily carry out. With the industry experience, they can come with the expert advices on claiming deductions and procuring essential supporting papers & forms to avail the tax return claims. Do find out if the property management is taxable or not.

Elevate values of the asset

The property is something whose value continues to go up over time. The need is to seek advice timely on this matter from the professional property assistant. Being aware of the local market, they know the exact value or how much it has increased and what the scope of increment in its value is. Ask for their opinions on how you can enhance the rental income or its overall value.

Fill up the gap between tenant & landlord

People often hire the professional caretaker of their property for conveniently and more often interact with tenants. The middleman is able to conveniently represent the owner over the phone or in-person for listening to their concerns and issues related to the real-estate. He can hold them back from making false excuses or creating emotional drama for postponing or delaying rent payments.

Bring rental benefits with peace of mind

A support in any form is a blessing. The real estate assistants are likewise, as they monitor the passive source of income (rental income) for owners. Despite being not-so-easy, they combat all hassles or troubles that come their way while overseeing the residential rental and maintenance. He bears all legal responsibilities to credit it to the account of owner & accommodating new tenancy quickly.

If you have any concerns related to property monitoring, Services 2 NRI is here to provide a professional assistance anywhere.

NRI Property Selling-Based Tax Exemptions in India

October 11, 2019 Manoj Sodhani Comments 0 Comment

The Indian diaspora in the foreign might have a score of queries regarding the property selling and their tax implications. Many of them often fail to access accurate information over it.

This blog covers all those pain points and the areas capital gains & exemptions on them after selling the property.

Let’s begin with a very common scenario wherein an Indian is shifted to the U.S.. Although he is living there, he has been managing property in India. While managing that property, he has been generating rental income for a fair four years. In legal terms, it is a long term capital gain for him.

Go through the difference between long term and short term capital gains.

Long term capital gains- These are the gains that one can get through rental income upon owning the property for the minimum of 2 or more years.
Short term capital gains-These are similar to long term gain, but the ownership of the property will be less than two years old. The rental income generated during that tenure will be termed as a short term capital gain.

NRIs deduct TDS on the sale of property:

The tax will be deducted according to long or short term capital gains. The cases of inherited property would not be barred from the TDS.

The long term capital gain shall be taxed 20%, whereas the percentage for short term capital gain shall be 30% in India. When the NRI sells that property, the buyer shall have to deduct the TDS.

In the meantime, the non-resident can claim for exemption under Section 54 and Section 54EC. But, this exemption is valid for long term capital gains sourced from the sale of the property in India.

Tips to win exemptions from long term capital gains to save tax on the sale of NRI property:

There are certain terms and conditions drafted regarding the sale proceeds of the property and exemptions. Upon satisfying these conditions, you can win them:

Invest in the property within one year before the date of transfer or, wait for years after that
Construct a house within three years after the date of transfer
The constructed property would remain unsold within three years of purchase
The new purchased or constructed property shall be located in India
You do have more than one residential property on the date of transfer
You do not invest in the new property within a period of two years or construct within a period of three years after such date

Once you satisfy these conditions, no tax on the capital gains would be levied. And, if you invest a part of the sale proceeds, the exemption will be proportionate to the invested amount to the sale price or exemption.

Tax exemption on the sale of NRI property under Section 54EC:

What if you do not want to invest in the property again?

Well, you still have an option to save on tax in such case. You can invest in certain bonds, which are:

National Highway Authority of India (NHAI)
Rural Electrification Corporation (REC)

Your investment in these bonds will be redeemable after five years. Simultaneously, you cannot sell them before the lapse of three years from the date of sale of the house property. You will have six months duration upon the sale to invest in these bonds. It is recommended to invest before the return of the filing date. As far as the limit is concerned, you can invest max to max INR 50 lakhs in a financial year in these bonds.

Tax Liabilities for NRI to Know before Buying Property in India

March 30, 2019 Manoj Sodhani Comments 0 Comment

Are you looking for guidance about tax implications regarding property?

Here it is! You can come across every point that is bouncing at the back of your mind.

Let’s begin with the kind of property that a non-resident can invest into.

Which kind of property can NRI buy?

The NRI can buy any residential property or real estate that is not an agricultural land, plantation property or farm house-this is what the Foreign Exchange Management Act (FEMA) states. It means that the Indian citizen residing in the USA or any other country can purchase the property for self- use, rental income or sole purpose of making investment.

The tax liability differs according to the usage of that property.

How many properties can he buy in India?

You, being an NRI, can buy more than one property in India. There is no restriction over it. But, the point of consideration is the aim underlying the purchase of that fixed asset. That aim can be bought for rent, family’s accommodation and potential capital appreciation.

Tax liabilities or implications for NRI to know before buying a property in India:

The tax liabilities or implications differ in each case-personal use, rental income and capital appreciation. Let’s go through each case sequentially:

If an NRI has one property: If the NRI occupies just one property for self-accommodation, there shall have no tax liability. It is the case of self-occupied property, although he is living abroad on account of his employment.
If he has more than one property: In this case, the resident holds more than one property, which (all) can’t be treated as self-occupied. However, it’s a provision not to levy tax on the residential property. But, it’s a case of holding multiple properties. Therefore, just one property will be assumed for self-accommodation, which is exempted from tax. The law assumes that the rest of the properties are bought for notional rental income, which is ‘Income from House Property’.
Rental income is taxable: The Income Tax law directs imposition of tax, if the resident with an Indian passport rents out his residential property for income. It is titled as ‘income from house property’.

But, the tax authority relieves a bit. It allows a standard deduction of 30 percent towards the repair and maintenance of the property, which includes other deductions like municipality tax, from the rental income.

If the property is bought for investment only: Renting it out reveals the intention of generating extra income. Plainly speaking, the non-residents focus on this investment with the view of making money. It rises on transferring it after selling. The sale of NRI property may attract long-term or short term capital gain.

Do NRIs require permission for investment in real-estate? What documents should they have for selling property in India?

No, they don’t need to take any permission in terms of transactions. But, they should keep into account these points while following the procedure of buying/selling property in India:

Transact through an NRI account of the normal banking channels.
Pay in Indian currency.
Pay through reserve funds of own or through home loans from banks/ financial institution of India.
RBI permits 80 percent (max) of the overall payment through loans from financial institution/banks.
Use inward remittance via NRO/NRE account in India. Alternatively, they can pay through post-dated cheques or Electronic Clearance Service (ECS) from NRO/NRE or FCNR accounts.
Power of Attorney (PoA) can also process the payment.
Besides, they should be aware of the fact that the monetory value (sale consideration) of house property is not less than its stamp duty value. If they ignore this fact, the deficit shall be taxable in the hands of buyers. It generally happens when the sale consideration and the stamp duty value exceeds INR 50,000.
The buyer should ask for Tax Deduction and Collection Account Number (TAN) for withholding of the tax.

How can NRI buyers deduct tax on selling property?

The characterization of the capital gain depends on period of holding that property. If one holds it for 24 months or less, it is a short-term capital asset. Its owner shall pay the tax according to its tax slab for NRIs. On the flip side, the same can be a long-term capital asset if it is held for more than 24 months. The latter case of capital asset attracts tax @ 20 percent plus applicable surcharge and cess.

The non-resident may claim for deduction if he invests the capital gain into a new residential property or government funds, as prescribed in the Income Tax Act, 1961.

Also, he, as a seller, may claim a credit in the country wherein he is temporarily living. The claim of credit shall be with respect to taxes paid in India as per DTAA (Double Tax Avoidance Agreement).

ROI (Return on Investment) according to different real-estates, as researched by ANAROCK:

Residential Property Classes	Approximate ROI (%)
Affordable	8-10
Mid-segment	6-8
Luxury	3-5
Ultra-luxury	2-3

Commercial Property Classes	Expected Rental Income (%)	Estimated Capital Gain (%)
Grade A Office	8-10	10-12
Grade B Office	5-7	6-8

Warehousing Property	Expected Rental Income (%)	Estimated Capital Gain (%)
Warehouse	4-6	5-7

Impact of RERA: RERA (Real Estate Regulatory Act) was coined on March 10, 2016 and became effective from May 1, 2017. It acts as an impetus or regulator to boost formalization of the sector. It enforces formalization through transparency in transactions, the tax reduction and certainty in tax positions.

Benefits of RERA for Industry, Developers, Buyers (NRIs) and Agents:

Industry

Developers

Buyers

Agents

Ø Governance, regulations with transparency

Ø Boost efficiency & robust delivery

Ø Maintain standard

Ø Confidence appreciation

Ø High ROI with PE funding

Ø Common & best practices for all developers

Ø Enhance efficiency

Ø Consolidated supply & work

Ø Promote corporate branding

Ø Organized funding

Ø Protect buyers from defaulters

Ø Timely delivery while using quality products

Ø Balanced agreements/contracts

Ø Transparency on sale

Ø Money security amid transparency

Ø State registration for consolidation

Ø Maintain transparency

Ø Boost efficiency

Ø Less chances of litigation

Tax liability for NRIs on commercial and residential property

It’s obvious that the tax liability on commercial storefront/ office/ property shall be more as compared to the residential property. The Income Tax Act highlights that the self-occupied residential property for NRIs attracts ‘zero’ notional rent.

On the other hand, the commercial co-working space and co-living space generates rental income in hand. Thereby, the imposition of the tax in this scenario of capital gain is obvious.

Tax implications in Budget 2019 for property investment:

The middle-class taxpayers can heave a sigh of relief. They can get one-time tax exemption on the capital gain worth INR 2 crores on selling the property. It is applicable only if the seller invests for the purchase or construction of two residential houses. One of them shall be exempted from notional rent provisions.

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.

What To Keep In Mind While Buying Property in Chennai in 2018?

January 23, 2018 Manoj Sodhani Comments 0 Comment

Most of the non-residents live with deep pockets. But, they don’t want to keep all eggs in one basket. It implies that they don’t want to invest their pan hard earned money in an equity or asset.

So, what should they do?

Should they keep that money in a bag for the lifetime?

Absolutely no, not at all!

One idea can help them multiply their money value. Let’s say, they invest in one of the fast developing areas or best place in Chennai or Tamil Nadu, they would get rental income as a capital gain monthly. It’s a viable investment in the property. Yes! It can let the non-residents live off through rental income. Or later, its selling value can make them a millionaire. But before jumping for joy, they must bear in mind these facts:

An act of guidelines called FEMA (Foreign Exchange Management Act) under the purview of Reserve Bank of India (RBI) was constituted in 1999 to look into all matters of NRI property & its management. It has set up a few rules to make the property management as easy as a walkover.

What FEMA suggests as mandatory requirements for NRIs to invest in the real estate?

The investor should be categorized clearly on the basis of his/her period of stay in India. He/she can be any PIO or OCI as well. But both these categories comprise the identical category namely non-residents.
Those who like to be an owner of a piece of land/property, they must have an Indian passport. Meanwhile, they don’t need to take permission from the RBI for investing, transferring, disposing or inheriting the property as a gift.
If the non-resident wants the property for the residential purpose, he/she can transfer, acquire, dispose of or inherit it. The payment mode, in such case, should be non-repatriation based. The owner must inform the RBI regarding it within 90 days of the purchase.
The immigrant Indian can buy one or many property but that must be immovable residential or commercial property. The property can be any plot, pre-launched property, ready to launch property or any under-construction property.
They are not allowed to invest/acquire in a piece of an agricultural land/farm house/plantation land. But if he/she has purchased such kind of property before joining the non-resident diaspora, he/she can sell. But the buyer must be an Indian citizen living in India.
If he/she is gifted any immovable property, he/she can inherit/transfer/gift it to the resident Indian.
The residents of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan are strictly prohibited to buy any Indian piece of land unless they get the permission of the RBI.

Which documents are required for a land purchase in India?

PAN card (Permanent Account Number)
Valid Indian passport
OCI/PIO card
Address proof
Passport sized photographs
Notarized power of attorney from the India consular service
Employment contract
Salary certificate
Valid visa
Work permit
Work experience certificate
Statement of NRO/NRE a/c

Things to know for NRIs to pay for the land purchase:

He/she can pay the remitted funds via regular banking channels or NRE/NRO or FCNR a/c. Traveller cheque or foreign currency is strictly ‘no’ for the land purchase in India.
He/she can take a loan to get the financial support as per the guidelines of the FEMA regulations. Do bear in mind that banks reject fresh grant of the loan or renew the existing loan if it’s more than INR 100 lakh against the FCNR and NRE deposits.
The loan will be available up to 80 percent of the total property cost. He/she must have the documents that are mentioned from 7 to 12 (in the aforesaid documents requirement) for owing fund as the loan. He/she must pay at least 20 percent of the total value of the land. For the payment of the loan amount, he/she shall pay the principal amount with the interest.
The repayment of that loan can be made through inward remittance. He/she can use any regular banking channel (NRO/NRE/FCNR) or rental income or relative’s a/c to pay the loan.
The non-resident can borrow funds (loan) for the renovation or managing the property that already exists in his/her name. Many housing finance companies offer this scheme for property management in Chennai, Mumbai, Kanpur, Delhi and other metro cities. It payment mode and procedure would be similar to the home loan (as foretold in the 4^th tip).
If he/she borrows the loan amount from the employer based in India, it would be permitted provided it is used for the purchase of the property in India. The lender would send the amount into the NEO a/c. For its repayment, the loan papers must read the repayment shall be done through the remittance from the account outside India. The fund shall be credited to his/her NRE/NRO/FCNR a/c. No other payment mode shall be valid.

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