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NRI property sale: dollar returns behind rupee gains, CA warns
According to chartered accountant Sidhant Agarwal, an NRI who invested Rs 22.6 crore in a property between 2015 and 2020 and sold it for Rs 60 crore today would see a currency-adjusted…
The Story in Brief
According to chartered accountant Sidhant Agarwal, an NRI who invested Rs 22.6 crore in a property between 2015 and 2020 and sold it for Rs 60 crore today would see a currency-adjusted IRR of just 6.5% in dollar terms over 11 years, compared to 10.7% in rupees. The example highlights how currency depreciation and tax treatment can erode real returns for NRIs who plan to spend wealth outside India.
Beyond returns, NRIs must navigate TDS obligations (12.5% for NRI sellers), repatriation limits ($1 million per year for NRO accounts), and FEMA rules requiring sale proceeds to go into an NRO account. Using NRE or FCNR accounts for purchase allows full repatriation of principal for up to two residential properties, but capital gains remain subject to the annual cap. Experts also warn against executing sale deeds for family transfers when gift deeds could avoid stamp duty.
The Indian Opinion
The narrative that Indian real estate offers risk-free double-digit returns for NRIs ignores the bite of currency depreciation and tax. The 6.5% dollar-denominated IRR, comparable to a global index fund, reveals that compliance burden and illiquidity are uncompensated. Another blind spot is the assumption that TDS is only the buyer's headache; sellers who don't verify deductions face interest and penalty. A simple test before any deal: calculate your post-tax, post-currency return in the currency you spend in. If it's under 7%, ask why not a mutual fund instead.
Sources (2): livemint.com, livemint.com (2)
This story was synthesised by AI from the 2 sources linked above.
Updated: this story now draws on 2 sources.
