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Can I Deposit Real Estate Sale Proceeds into My NRE Account?

Moneywize

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Financial Planner - Answered on Aug 24, 2024

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Asked by Anonymous - Aug 16, 2024Hindi
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Can the sale proceeds of a property held for over 14 years and bought from NRE account be credited back to NRE account?

Ans: Yes, the sale proceeds of a property held for over 14 years and bought from an NRE account can generally be credited back to the same NRE account.

Here's a breakdown of the relevant regulations:

• Foreign Exchange Management Act (FEMA): This Indian law governs foreign exchange transactions.
• Non-Resident External (NRE) Account: This type of account is primarily for NRIs (Non-Resident Indians) to hold foreign currency.

Under FEMA, NRIs can:

• Acquire residential property in India: Using funds from NRE accounts or through inward remittances.
• Sell residential property in India: Repatriate the sale proceeds outside India.

Important conditions:

• Long-term capital gains tax: If the property was held for more than 14 years, the long-term capital gains tax may be applicable. However, there are exemptions and deductions available.
• Repatriation limit: There may be a limit on the amount that can be repatriated per financial year, especially if the property was acquired using funds from an NRO (Non-Resident Ordinary) account or Indian income.

It's crucial to consult with a financial advisor or tax expert to ensure compliance with all applicable laws and regulations, as specific circumstances may vary.
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Mihir

Mihir Tanna  |1064 Answers  |Ask -

Tax Expert - Answered on Nov 17, 2022

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I am a senior citizen retired pensioner. I had intention to sell my both properties located in one town and to invest in one property in another town where I wanted to settle in my retired life. I wanted that the sale proceeds of my two properties should be almost same as the purchase value of a single property in another town to settle there. I had bought a property in 2015 at Rs 40 lakh in my single name and sold in Feb 2022 at Rs 52 lakh. The buyer deducted 1% TDS and filled in form 26QB and I got form 16(B) from buyer and details of TDS are seen reflected in my Form-26AS. Thereafter, my 2nd property that I had bought @Rs 7.3 lakh 20 years back, was attempted to dispose, but did not materialise till now.  Anyway, I bought a 5-yr-old jointly owned property from a couple at Rs 80 lakh in June 2022 and deducted 1% TDS (@0.5% from each owner), filled in Form 26QB and provided form 16(B) to the sellers.  So, I invested the sale proceeds of my 1st house 'within a year' of its disposal, in buying a house from Long Term Capital Gain point of view. My IT Return for AY 2022-23 was filed in July 2022 and it got approved. The 1% TDS deducted by buyer on my 1st property sale got refunded/ adjusted.  I am still trying to sell my 2nd property 'within one year' of buying the June, 2022 property. I want to do this to take benefit of Long Term Capital Gain Tax. I want to know whether I am going to get the IT benefit by selling my 2nd property 'within one year' of purchase of my June 2022 property ? I am more eager to know how sale of 1st property in financial year 2021-22 (Feb.'22), purchase of a property in FY 2022-23 (June'22) and again sale (proposed) of 2nd property, (all within 2 years from LTCG point of view) are shown in my next IT Return (AY2023-24).  I am eager to hear from you, Sir!
Ans: As you must be aware, if person wants save tax on capital gain, person should acquire another residential house within a period of three years from the date of transfer of the old house or should construct a residential house, within a period of one year before or two years after the date of transfer of old house.

With effect from Assessment Year 2021-22, the benefit in respect of investment made in two residential house properties is available. The exemption for investment made, by way of purchase or construction, in two residential house properties shall be available if the amount of long-term capital gains does not exceed Rs 2 crore.

If assessee exercisesoption, he shall not be entitled to exercise this option again for the same or any other assessment year.

Benefit will be lower of following:

  • Amount of capital gains arising on transfer of residential house; or
  • Amount invested in purchase/construction of new residential house property

If till the date of filing the return of income, the capital gain arising on transfer of the house is not utilised (in whole or in part) to purchase or construct another house, then the benefit of exemption can be availed by depositing the unutilised amount in Capital Gains Deposit Account Scheme in any branch of public sector bank, in accordance with Capital Gains Deposit Accounts Scheme, 1988.

So in your case, if you satisfy all the prescribed conditions (including acquiring new property within 3 years, depositing unutilised amount in capital gain deposit account and disclosure is made regarding same in ITR of AY 2022-23 & AY 2023-24); you will get IT benefit.

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Moneywize

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Financial Planner - Answered on Jul 28, 2024

Asked by Anonymous - Jul 26, 2024Hindi
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Can the sale proceeds of a property held for over 10 years and purcahsed from NRE account be credited back to NRE account? I plan to sell my flat in Bengaluru, which today costs around Rs 2.5 crore.
Ans: Can Sale Proceeds of a Property Held for Over 10 Years and Purchased from NRE Account be Credited Back to NRE Account?

Short Answer: No.

Long Answer:

While it might seem logical to credit the sale proceeds of a property purchased with NRE funds back to the same NRE account, the Foreign Exchange Management Act (FEMA) in India has specific regulations for this.

Key Points:

• Sale Proceeds Account: The sale proceeds of any property in India, regardless of the source of purchase funds, must be credited to a Non-Resident Ordinary (NRO) account.
• Repatriation Limits: You can repatriate up to USD 1 million per financial year from your NRO account, including sale proceeds. This amount is cumulative for all capital transactions.
• Long-Term Capital Gains Tax: If you've held the property for more than 10 years, you may be eligible for long-term capital gains tax benefits. However, this is a separate tax matter -- more so after the removal of indexation benefits for calculating LTCG as per the provisions of Union Budget 2024-25 -- and doesn't affect the account where sale proceeds are credited.

Why NRO Account?

The NRO account is specifically designed to hold income earned in India by non-resident Indians. Since the sale proceeds of a property in India are considered income earned in India, they must be parked in an NRO account.

Additional Considerations:

• TDS Deduction: The buyer is required to deduct Tax Deducted at Source (TDS) on the sale amount.
• Form 15CA/15CB: You will need to submit Form 15CA and 15CB to repatriate the sale proceeds.

Seeking Professional Advice:

Given the complexities of NRI taxation and foreign exchange regulations, it is highly recommended to consult with a tax and foreign exchange expert or a chartered accountant who specializes in NRI matters. They can provide tailored advice based on your specific circumstances and ensure compliance with all applicable laws.

By following these guidelines and seeking professional advice, you can smoothly navigate the process of selling your property and managing the sale proceeds.

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HR, Leadership coach - Answered on Jul 03, 2025

Asked by Anonymous - Jun 11, 2025Hindi
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Hi. I am currently 29. Married with no kids. Wife not earning. Planning for a kid this year. Monthly earning 60k post tax. Have savings of 2 lakhs. Have personal loan of 9 lakhs. Monthly expenses 40k including emi's. I have lost interest in job and I don't want to work anymore. I want to do business which can give monthly 50 to 60k income. Max I can invest 2lakhs. Is there any business which I can start with 2 lakhs and generate monthly income of 60k ? I am frustrated with working under an employer. I want to start my own venture. Please suggest.
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Which is better among cse or csai?
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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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