Buying Property Abroad from India

More Indians are looking to buy property in Dubai from India than ever before — and Dubai is just the start. London, Singapore, and New York are all on the radar. But while your real estate agent will talk about freehold zones and Golden Visas, they will not mention the 20% TCS that hits your remittance, the FEMA penalties for non-compliance, or the fact that you must declare this property in your Indian ITR every single year for as long as you own it.

This guide covers the complete compliance side — the FEMA rules for buying property abroad, the LRS process, TCS impact, Form A2 and Form 145/146 requirements, Schedule FA foreign assets disclosure, rental income taxation, capital gains on sale, and the penalties you face if you get any of this wrong. Think of it as everything your real estate agent will not tell you.

Yes. Resident Indians can legally purchase immovable property abroad — residential, commercial, or land — under the Liberalised Remittance Scheme (LRS).

The legal framework is:

• Foreign Exchange Management (Overseas Investment) Rules, 2022 — Rule 21(2) grants general permission for resident individuals to acquire immovable property outside India through LRS remittances
• RBI Master Direction No. 15/2024-25 — consolidated direction on overseas investment, including property purchase
• No prior RBI approval is needed for property purchase — the general permission under Rule 21(2) is sufficient

The LRS limit is USD 2,50,000 per person per financial year (April–March). This is cumulative across all LRS purposes — education, travel, investment, property, and gifts combined. The actual outward remittance — bank charges, FX margin, SWIFT timelines, and compliance touchpoints — works the same way as for any other LRS purpose.

Family Pooling Strategy

Since the limit is per person, family members can combine their individual limits to fund a high-value property:

Key Rules for Family Pooling

• All family members contributing LRS limits must be co-owners of the property
• Each person must independently file their own Form A2, LRS declaration, and have valid PAN and KYC
• Each person’s source of funds must be independently documented — a non-earning spouse needs a gift deed from the earning spouse, plus bank statements showing the gift
• Best practice: Match ownership proportion to contribution proportion. If husband contributes 70% but ownership is 50-50, the excess 20% is a deemed gift — exempt from gift tax since spouse is a "relative", but rental income on that 20% gets clubbed back with husband under Section 99(1)(b)
• Minor children can use their own LRS quota (guardian signs Form A2), but all income from the minor’s share is clubbed with the higher-income parent under Section 99(1)(d)

Property purchase falls under "purposes other than education or medical treatment" in Section 394(1). The TCS rate is 20% on amounts above ₹10 lakh — the highest TCS category.

How This Hits Cash Flow on a ₹2 Crore Property

Dubai is the number one destination for Indian property buyers, and for good reason — no income tax, freehold ownership, and a 10-year Golden Visa. But the buying property in Dubai from India tax implications are significant and often overlooked.

What Your Dubai Agent Will Tell You

• Freehold areas: 50+ designated zones including Marina, Downtown, Palm Jumeirah, JVC, Business Bay, Arabian Ranches, JBR. New in 2025: Al Jaddaf and parts of Sheikh Zayed Road converted to freehold
• DLD registration fee: 4% of purchase price (legally split buyer/seller, but buyer usually pays full)
• Payment plans: 50/50, 40/60, or 1% monthly plans from developers for off-plan purchases — effectively 0% interest
• Golden Visa (February 2026 update): Property worth AED 2 million+ qualifies for a 10-year residency visa. Down payment requirement eliminated — can qualify even with 80% mortgage. Off-plan eligible. Family inclusion: sons of any age, unmarried daughters of any age, parents. No minimum stay requirement.
• RERA escrow: Off-plan purchases must go through DLD-approved escrow accounts — AI-backed construction audits since 2025, funds released only after milestone verification

What Your Dubai Agent Will NOT Tell You

If you want to buy property in London from India, be prepared for significantly higher stamp duty than advertised.

Stamp Duty Land Tax (SDLT) — The Real Numbers

From April 2025, the nil-rate threshold reverted to £125,000. Indian buyers face three layers of SDLT:

Worked Example — £500,000 London Apartment for an Indian Buyer

• LRS limit challenge: A modest two-bedroom flat in Zone 2–3 costs £400,000–600,000 (USD 5,00,000–7,50,000) — requiring family pooling or multi-year planning
• UK mortgage for Indians: Difficult — India is NOT on HSBC UK’s approved country list for non-resident mortgages. Specialist brokers (Fox Davidson, Willow Private Finance) may find products at 60–75% LTV with a 20–25% currency risk buffer applied to foreign income
• DTAA advantage over Dubai: The India-UK DTAA means rental income and capital gains are taxable in both countries, but you claim FTC in India for UK taxes paid — so you are not double-taxed. UK CGT for non-residents: 18% basic rate / 24% higher rate, with only £3,000 annual exempt amount. Mandatory 60-day reporting rule for CGT after completion

Singapore is the most restrictive of the three. The Additional Buyer’s Stamp Duty (ABSD) for foreign buyers is 60% since April 2023 — unchanged for 2026.

• Seller’s Stamp Duty (SSD): If you sell within 4 years — 16%/12%/8%/4% for properties bought after July 2025
• Non-resident rental income tax: Flat 24% (no progressive rates for non-residents; up from 22%). Property tax: 12–36% progressive on annual value
• DTAA: Singapore-India DTAA allows FTC — since Singapore non-resident rental tax (24%) likely exceeds Indian rates, FTC wipes out Indian tax on rental income
• Practical alternative: Commercial property (no ABSD) or Singapore REITs listed on SGX (38 listed, average yield ~6.9%) offer Singapore real estate exposure without the 60% ABSD barrier

The practical position on Form 145/146 for property purchases abroad — governed by Rule 220 of the Income Tax Rules, 2026:

This is the compliance requirement that catches the most people. Under Section 263(1)(a)(ix) of the Income Tax Act, 2025, every resident (other than not ordinarily resident) who holds any asset located outside India must file an ITR — regardless of income level.

What You Must Disclose in Schedule FA Foreign Assets

Table C of Schedule FA covers immovable property with 11 columns:

Penalties for Non-Disclosure — Black Money Act, 2015

The foreign assets disclosure in ITR is not optional. Non-disclosure triggers the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015:

FAST-DS 2026 — The Escape Route

Rental income from foreign property is taxable in India — you are a resident, and India taxes your global income. The question is whether you can claim credit for foreign taxes.

Deemed Let-Out — Two Self-Occupied Properties Rule

Under Section 21(2), you can designate up to two properties as self-occupied with nil annual value — and a foreign property can be one of the two. If you own one house in India (self-occupied) and one in Dubai (vacant), both can have nil annual value. But a third property would be "deemed let-out" — taxed on notional rent even if vacant.

India-UAE (Dubai): No FTC Available

India-UK (London): FTC Available

UK charges income tax on non-resident rental income at 20% under the Non-Resident Landlord (NRL) scheme — withheld by the letting agent unless you have NRL approval (Form NRL1) from HMRC. Allowable UK deductions: mortgage interest (basic rate relief only), insurance, repairs, letting agent fees (10–18%). You pay UK tax and then claim FTC in India — net additional Indian tax is only the differential. Total combined tax (UK + India net of FTC) equals the Indian tax liability — the FTC ensures you do not pay more than Indian rates, but you do not save tax either.

Effective Tax Rate Comparison (30% Bracket)

How to Report

Capital Gains Tax — Host Country

Capital Gains Tax — India

Since you are an Indian resident, capital gains from selling foreign property are also taxable in India:

• Long-term (held > 24 months): 12.5% under Section 197 — no indexation for properties acquired on or after 23 July 2024
• Grandfathering (acquired before 23 July 2024): Lower of 12.5% without indexation OR 20% with indexation — significant benefit for pre-July 2024 purchases
• Short-term (held ≤ 24 months): Normal slab rates
• Currency conversion: Rule 115 — SBI TTBR on the last day of the month preceding the month of sale. The same rate applies to both cost and sale consideration — effectively neutralising forex gains/losses
• Surcharge on LTCG: Capped at 15% even if total income exceeds ₹2 crore

Exemptions Available

Repatriation Rules

• 180-day deadline: Sale proceeds must be repatriated within 180 days through AD bank — failure is a FEMA contravention
• No cap on inward remittance amount — the USD 2,50,000 LRS limit applies only to outward remittances
• Bank issues FIRC (Foreign Inward Remittance Certificate) — preserve this
• Year of taxation: Capital gains are taxable in the year of sale, not the year of repatriation
• Claim FTC via Form 44 with Schedule FSI and Schedule TR
• Returning NRIs: If the property was originally bought while you were an NRI and you have since returned to India, the residency-change rules and RNOR window materially change repatriation and tax outcomes

1. TCS eats 20% of your remittance above ₹10 lakh. On a ₹2 crore property, that is ₹38 lakh blocked until your ITR refund — 6 to 12 months.
2. You MUST declare this property in your Indian ITR forever. As long as you own it — even if vacant, even if under construction. Miss one year? ₹10 lakh penalty under the Black Money Act.
3. Golden Visa does NOT make you an NRI. You become an NRI only by being physically outside India for 182+ days. A Golden Visa changes nothing about your Indian tax status.
4. Dubai rental income is fully taxable in India with zero offset. After ongoing costs, your advertised 8% gross yield becomes 4–5% net of Indian tax.
5. Selling requires 180-day repatriation. Sale proceeds must be repatriated within 180 days — failure is a FEMA contravention.
6. Indian banks cannot give you a home loan for overseas property. This is a hard regulatory bar, not a bank policy choice.
7. Family pooling has income clubbing consequences. If husband funds wife’s share, rental income on the gifted portion is clubbed back with husband.
8. Wrong purpose code on Form A2 = rejection. It must be S0005 — not S0001 (equity) or S0301 (business travel). One wrong digit, and your remittance is returned.
9. Inheritance follows foreign country law, not Indian law. Dubai defaults to Sharia for non-Muslims unless a DIFC will is registered. Your Indian will does not cover foreign immovable property.
10. FEMA penalties can be up to 3× the contravention amount — plus ₹5,000 per day for continuing violations. Total exposure under Black Money Act + FEMA can reach 5.6 times your property value.

• Before remitting: To structure LRS pooling, estimate TCS, arrange source-of-funds documentation, and assess FEMA compliance
• At purchase: To determine Form 145/146 applicability and structure ownership for tax efficiency
• After purchase: To set up Schedule FA disclosure, rental income reporting, advance tax, and FTC claims
• At sale: To compute capital gains in both jurisdictions, evaluate Section 82/85/86 exemptions, and file Form 44
• For Golden Visa holders: To analyse deemed resident provisions, DTAA tie-breaker implications, and 120-day trap