FINANCE TIP OF THE DAY
Can you afford your loan?!
Know the quantity of loan you can afford. The banks may sanction loan based on your income but you should look at your monthly expenditure and see if you can afford the maximum that banks offer. As a thumb rule, remember not to let your credit exceed 40% of your income!
Buying a property abroad?
The current economic turmoil in US and European nations have led to a sharp fall in property prices there making them extremely lucrative for non-resident Indians as well as resident Indians to invest in. More and more Indians are opting for offshore properties as a second home in exotic locations.
However the process of purchasing a property in foreign countries has its own share of complexities, which need to be addressed before committing the money. Properties owned by banks as a result of fore closure or as non performing assets are the most sought after while there are a few places, which advertise their real estate as means of secure investments for foreigners.
Where to Look for?
Indians are increasingly acquiring properties across the globe but the leading destinations for offshore properties remain London, New York, Singapore and Dubai. Exotic holiday destinations such as Thailand, Malaysia, Southern France, Florida and Mauritius are also gaining rapid popularity among those looking to invest abroad in real estate. London is popular due to its assured returns over a long horizon while resort locales are being used as a second home for the rich and famous. The sea side resort of Pattaya is offering three bed room independent houses at prices as less as 60 to 70 lakhs, which are pretty competitive compared to such houses in Tier 1 cities of India. The places in US are preferred by Indians who have either studied there or have worked for some time. Despite the high prices of real estate in Dubai, it is still popular due to its proximity to India and the presence of large Indian diaspora in the city.
Legal Precautions before Investing
Before even thinking of buying a property offshore one needs to be absolutely clear regarding property laws in India and other countries. Indians are permitted to buy property in foreign nations by making an annual remittance of up to $ 2000000 in a financial year. The Foreign Exchange Management Act also permits Indians to acquire property abroad as gifts or through inheritance. Additionally resident Indians can own property elsewhere in case it was acquired while they were not residents of India. However one must consult trusted legal experts in country where they want to buy the property in regarding local taxation policies, citizenship laws and ownerships provisions. Many nations mandate foreigners to pay a huge property transaction fees while making the purchase. Extra stamp duty costs are often levied on foreigners acquiring property in certain countries which may add up to the total cost significantly.
Practical Considerations when Buying Property Offshore
Here are a few practical guidelines that will come handy while setting out to buy yourself a house in some exotic location abroad or a simple investment in foreign countries.
- Make sufficient number of visits to that place during different parts of the year to get a broad overview of the locale.
- Remember there is adequate scope of bargaining at all places around the world and do not swayed by the quoted price.
- Get a consolidated list of all transaction charges, stamp duties and associated fees for buying the property beforehand.
- Always negotiate through a reputed property brokerage firm of that country.
- Additionally hire an independent legal advisor to give detailed inputs.
- Time your purchase when the exchange rates of that country’s currency are in your favor.
- Understand the legal implications of your purchase and rules that govern your access to that country.
Owning a grand property in foreign nations is no more the domain of the extremely rich anymore. However there is a definite need for detailed analysis and planned approach in order to get a good deal and avoid legal complications subsequently.