Indians who want to buy property abroad are looking to benefit from the global recession. Dubai, earlier deemed unaffordable for most, is now being looked at as the most sought after destination for purchasing one’s dream home. United Kingdom, Singapore, Australia and New Zealand are other places already established as hubs for the Indian population -inviting professionals to invest with the intention of finally settling down there.
1 Clarity of purpose. However, it has to be clarified that the law nowhere provides that possession of property abroad would be a conclusive passport for purposes of immigration. Under the laws of UK and Australia, there are no guarantees for a visa or citizenship for an outsider buying property. Thus, realising the purpose of such an investment is important. If it’s for immigration, it is certainly not the most viable option. However, if your children study abroad or you have business to manage there and are a frequent visitor abroad (for some reason), then investing makes absolute sense.
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2 Personal due diligence via Internet should be adopted at the initial stages to collect information about the countries one is considering, that is, their climate, cost of travel, frequency of flights, stability of economy and other factors.
3 The taxation law implications of different nations vary considerably. There are four main con siderations here, namely, taxes payable upon purchase of property, ongoing ownership of prop erty, renting of property, including income tax and sometimes extra non-resident tax and disposal of property. Certain jurisdictions impose heavier taxes on commercial properties, while for purchase of a holiday home or home for rental income, one may have to pay just the domestic taxes. Besides this India provides for Double Taxation Avoidance Agreement with 79 countries according to which tax would be charged as per the domestic law of the country where the property is situated. Moreover, there are countries where failure to pay taxes can lead to court action and possible seizure of the property. Thus, a resident interested in purchasing overseas property should declare the income earned from such investment in income tax returns. He may also have to file a tax return in the country where the assets are held if the local laws so require.
4 The RBI guidelines on acquisition of immovable property outside India by residents should be carefully examined. For instance, RBI has clarified that under the Voluntary Disclosure of Income Scheme if a person is holding more than one property abroad, he would be allowed to keep one and the remaining have to be sold and the proceeds thereof can be repatriated to India. Non-observance of such a rule before concretising the property deal would only lead to legal complications.
5 Residents are free to buy property without prior approval of the RBI under the Foreign Exchange Management Act (FEMA). They are also permitted to open, maintain and hold foreign curren cy accounts with a bank outside India without prior approval of the RBI. On the whole, RBI has been liberalising its remittance scheme and as per the latest scheme since 2007, residents can remit up to US $ 2 lakh outside India for any purpose inclusive of acquiring property outside and opening accounts with a bank outside India.
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