Moving Abroad? What Changes for Your Property in India
Moving abroad doesn't force you to sell anything: section 6(5) of FEMA lets an NRI keep property bought while resident in India. What changes is how you hold it. Your savings account must become an NRO account, your lender must be told, a tenant must start deducting 31.2% TDS on rent, and someone in India needs a power of attorney to act for you.
Key takeaways
- Decide keep, rent or sell before the move. A sale while you are still resident carries 1% TDS; after you become an NRI, up to 14.95% of the price.
- Resident savings accounts must be converted to NRO accounts once your status changes. Open an NRE account for money you earn abroad.
- Your home loan continues, but on NRI terms: EMIs must come from your NRE or NRO account, not a foreign account.
- A tenant paying an NRI deducts 31.2% of the rent from the first rupee. Budget for it, or apply for a lower deduction certificate.
- Give a trusted person a specific power of attorney before you leave, and line up a caretaker or manager for the flat.
When you actually become an NRI
For banking and property, FEMA looks at intent: once you leave to take a job or live abroad for an uncertain period, you are a person resident outside India. For income tax, an Indian citizen who leaves for employment abroad is resident that year only if they spend 182 days or more in India; the alternative 60-day test doesn't apply. Leave in July and you'll usually be a non-resident for the whole tax year. Leave after September and you've likely crossed 182 days, so you are resident for that year even though you've gone.
That matters for timing a sale: the buyer's TDS follows your tax residence for the year. The reverse move is covered in our guide for returning NRIs.
Keep, rent or sell
| Choice | Suits you if | What it involves from abroad |
|---|---|---|
| Keep it empty | You'll be back within a year or two, or family will use it | Maintenance, society dues and property tax paid from NRO; a caretaker checking it |
| Rent it out | You want income and are staying away several years | 31.2% TDS by the tenant, an Indian tax return each year, a manager or relative dealing with repairs |
| Sell before leaving | You won't come back, or need the money abroad | Buyer deducts 1% TDS if you're still resident; normal resident paperwork |
| Sell after leaving | You want to wait for a better price | Buyer deducts up to 14.95% of the price unless you get a lower deduction certificate; a power of attorney if you're not present |
Worked example: selling before or after the move
You plan to sell a Rs 1.5 crore flat you've owned for years.
- As a resident: the buyer deducts 1%, Rs 1,50,000.
- As an NRI, without a certificate: the buyer deducts 14.95%, Rs 22,42,500.
Neither is your final tax; that depends on the gain, and our capital gains guide works it out. But the NRI route ties up an extra Rs 20,92,500 until your return is processed, unless you get a lower deduction certificate first, which takes weeks. If you already know you'll sell, doing it before you leave is simpler. As an NRI you can later send up to USD 1 million a year of sale money abroad from your NRO account.
Your bank accounts
FEMA requires resident savings accounts to be converted to NRO accounts once you become an NRI. Most banks do it on a form with your passport, visa and overseas address, and many open an NRE account alongside on the same customer ID. A resident account left running is the commonest FEMA breach among new NRIs.
| Account | Use it for | Interest in India | Joint holding with a resident | Currency risk |
|---|---|---|---|---|
| NRO | Indian income: rent, dividends, pension; paying Indian bills | Taxable; TDS at 30% plus cess | Allowed | Rupee, so yes if you convert abroad |
| NRE | Money earned abroad and sent home; EMIs | Tax-free | Only with another NRI, or with a resident relative on a former-or-survivor basis | Rupee, so yes |
| FCNR(B) deposit | Foreign savings you want held in dollars, pounds or euros | Tax-free | As for NRE | None on principal; terms of 1 to 5 years |
Two traps. Rent from your Indian flat belongs in the NRO account, not the NRE one, which is meant for money from abroad. And NRE and FCNR deposits closed within the first year earn no interest, so don't park money you'll need soon.
Your home loan
An existing home loan doesn't have to be repaid when you move. Tell the lender in writing, update your KYC and overseas address, and move the EMI mandate to your NRE or NRO account; EMIs can't be paid straight from a foreign account. Some lenders reprice the loan on NRI terms, which are the same as or slightly above resident rates. If the rent will service the EMI, both can run through the NRO account. How NRI loans are priced and documented is covered in home loan for NRIs.
If you rent it out
Once you are non-resident for tax, your tenant's duty changes too. A resident landlord's individual tenant deducts nothing on rent of Rs 50,000 a month or less. An NRI landlord's tenant must deduct 31.2% from every rupee, needs a TAN and files quarterly returns. Tell the tenant in writing, and put the TDS clause in a fresh registered rent agreement.
Worked example: Rs 45,000 a month
| Monthly | While resident | After becoming NRI |
|---|---|---|
| Rent | Rs 45,000 | Rs 45,000 |
| TDS by tenant | Nil (under Rs 50,000) | Rs 14,040 (31.2%) |
| Property manager at 10% of rent | Not needed | Rs 4,500 |
| Cash reaching your account | Rs 45,000 | Rs 26,460 |
Over a year the tenant withholds Rs 1,68,480. Your actual tax on that rent is usually far lower, so most of it comes back as a refund, but only after you file. Our guide to NRI rental income tax shows how to cut the deduction at source. Managers quote anything from 5% to 12% of rent, or a fixed Rs 20,000 to Rs 50,000 a year; 10% is used here.
Someone to act for you: power of attorney and caretaker
Before you leave, sign a specific power of attorney in favour of a person you trust, covering what they may do: dealing with the society and municipality, signing a rent agreement, handling repairs, and if you want, selling. A sale needs a specific, property-described power, and in most states it must be registered where the property sits. Signed in India before you go, it avoids the steps needed later abroad: signing before the consulate or a notary with an apostille, then stamping within three months of it reaching India. A general power used to "sell" a flat carries its own risks, explained in GPA sale of property risks.
Separately, arrange a caretaker, a relative or a paid manager, to visit the flat, pay bills, deal with the society and keep keys. Give the society and the tenant their contact in writing.
Where new NRIs go wrong
- Leaving the resident account open. Convert it as soon as your status changes.
- Letting the tenant carry on as before. If no TDS is deducted, the tenant is in default, and the tax is still yours to pay.
- Signing a broad power of attorney. Limit it to the property and the acts you need, and revoke it in writing when done.
- Misjudging the sale date. The buyer's TDS follows your tax residence for the year, not the flight date. Leave in July and an August sale is likely an NRI sale.
- Ignoring the flat. Unpaid society dues and property tax pile up; set standing instructions from the NRO account.
For the wider case for holding Indian property from abroad, see our guide to NRI property investment in India.
Frequently asked questions
Do I have to sell my flat in India when I become an NRI?
No. Section 6(5) of FEMA lets a person resident outside India keep property they acquired while resident, and you can rent it, gift it to a relative or sell it later. What changes is the paperwork: NRO accounts, 31.2% TDS on rent, NRI terms on your home loan and higher TDS if you sell as a non-resident.
Can I keep my resident savings account after moving abroad?
No. FEMA requires a resident savings account to be converted to an NRO account once you become an NRI. Take your passport, visa and overseas address to the bank, and open an NRE account at the same time for money you send from abroad. An NRO account can be held jointly with a resident family member.
Can my EMI be paid from my overseas bank account?
Not directly. An NRI home loan must be serviced from an NRE or NRO account in India, or by remittance through banking channels into one of them. Rent from the flat, credited to your NRO account, can pay the EMI. Tell your lender about your new status and switch the mandate before your first overseas salary arrives.
Should I give a power of attorney before I leave or after?
Before, if you can. Signing in India is quicker and cheaper than signing abroad, where the document needs consulate attestation or an apostille and must be stamped within three months of reaching India. Keep it specific to the property and the acts you need, and register it if it covers a sale.
Is it better to sell before I move abroad?
If you're sure you'll sell, usually yes. From a resident seller the buyer deducts 1% TDS; from an NRI, up to 14.95% of the price unless you first get a lower deduction certificate. The test is your tax residence for that year, so a sale after an early-year departure is likely an NRI sale. Closing before the flight removes the doubt.
If you're heading abroad and want to decide what to do with a flat you own, the Realty Hunting team is happy to help you weigh it up.
