As a Non-Resident Indian (NRI) investing in real estate in India, it’s crucial to understand the laws surrounding co-ownership. Here are the points NRIs should know:
Permissible Co-Ownership Arrangements
- NRIs can jointly own properties with other NRIs or Persons of Indian Origin (PIOs).
- Co-ownership with Indian residents who are not NRIs or PIOs is not allowed, except in cases of inheritance.
Rights and Responsibilities of Co-Owners
- Co-owners have equal rights to possession, use, and disposal of the property.
- Responsibilities, such as maintenance costs and taxes, must be clearly defined in a co-ownership agreement.
Establishing a Co-Ownership Agreement
- A well-drafted co-ownership agreement should outline each party’s rights, responsibilities, profit-sharing, and exit strategies.
- The agreement should comply with Indian laws and be legally enforceable.
Transferring Co-Ownership Shares
- A co-owner can transfer their share in the property to another NRI or PIO.
- The transfer must be done through a legal deed and comply with relevant regulations.
Appointing a Power of Attorney
- NRIs can appoint a trusted individual as their power of attorney to handle property-related matters in their absence.
- The power of attorney must be executed in the presence of a legal official.
Tax Implications
- Co-owners are liable for taxes on their respective shares of rental income and capital gains.
- Consulting a tax expert is advisable to understand the tax implications and optimise liabilities.
Remember that through understanding these co-ownership laws, NRIs can make informed decisions and engage in successful joint investments in Indian real estate while minimising legal risks and ensuring compliance with regulations.
