NRIs face tax hurdles on property repurchase, experts warn

NRIs looking to buy back their own Indian property face tax implications, industry experts have warned. Gulf News reports that under current rules, an NRI who sells a property and later repurchases it may be liable for capital gains tax on the original sale, even if the property was their residence. The tax is calculated on the indexed cost of acquisition, and the repurchase does not automatically exempt the seller from the tax liability.

Tax experts cited by Gulf News say that NRIs should consult a chartered accountant before repurchasing a property they previously owned, as the tax treatment can be complex. The tax liability depends on the holding period and whether the property was used for self-occupation or rented out. For properties held for more than three years, the gains are treated as long-term capital gains, taxed at 20 percent with indexation benefits.

The report advises NRIs to consider the tax implications when planning property investments in India, and to explore options such as reinvesting the sale proceeds in another residential property under Section 54 of the Income Tax Act to claim exemption. The next step is for NRIs to evaluate their specific holding period and tax status before any transaction.