Is buying property abroad legal in India? Yes, for resident individuals: FEMA and the RBI’s Liberalised Remittance Scheme let you remit up to USD 250,000 per financial year through an authorised bank to buy residential or commercial property overseas, with no prior RBI approval, provided the money is legitimate, tax is collected at source and the property is declared in your income tax return. The risk lies in sloppy compliance, not in the purchase itself, and Indian enforcement agencies have started acting on it. This is general information, not legal or tax advice.
What to Know Before You Wire Anything
- Legal basis: FEMA, the Overseas Investment Rules, 2022 and the RBI’s LRS
- Annual limit: USD 250,000 per resident individual per financial year, including minors
- Route: only through an authorised dealer bank in India
- Tax collected at source: 20% on LRS remittances above ₹10 lakh according to a recent explainer, though older sources say ₹7 lakh
- Disclosure: mandatory in Schedule FA of your income tax return, with a ₹10 lakh penalty per year for non-disclosure under the Black Money Act
The Legal Basis
India permits it, with conditions.
- Section 6(4) of FEMA allows Indian residents to hold or acquire immovable property outside India in line with RBI regulations, according to CourtKutchehry
- Section 4 of FEMA says a person resident in India can’t buy, hold, own or transfer property abroad unless it’s done according to FEMA rules or RBI guidelines, according to Adam Fayed’s explainer
- Together they mean a general ban with a regulated exception, and LRS is the main exception
- A resident individual can acquire immovable property abroad under the LRS and the Overseas Investment Rules, 2022, according to Matrix Forex
How the USD 250,000 Limit Works
The limit is per person, per year.
- Every resident individual can remit up to USD 250,000 per financial year, from April to March, for permitted transactions, according to Paasa
- It covers residential and commercial immovable property, according to the same source
- Another explainer says the permission is generally for personal use, such as a house or apartment for self-occupation or renting out
- The RBI’s FAQs also treat buying shares of a foreign company that owns immovable property as within the limit, according to Realty Applications
- Roughly USD 250,000 is about ₹2.2 crore, according to Luxury Properties India
Stretching the Limit Legally
You can scale up, but only within the rules.
- A couple can jointly remit up to USD 500,000 in a financial year, because each qualifying member has their own limit, according to BW Businessworld
- Two to four residents can jointly buy a property, according to CourtKutchehry
- An under-construction apartment worth USD 1 million could be paid for with USD 250,000 a year over four years, according to the same source
- Splitting payments across financial years is a common structure for higher-priced properties, according to the Medium explainer
Borrowing to Fund the Rest
The sources conflict.
- FEMA provides a narrow exception allowing a resident individual to borrow up to USD 250,000 from close relatives living abroad, according to Paasa
- CourtKutchehry says a USD 500,000 property can be financed by remitting USD 250,000 and financing the balance through an overseas loan
- Luxury Properties India says you aren’t allowed to borrow from overseas banks to fund such purchases
- Treat the relative-loan exception as the narrow, safe reading and take advice before arranging any overseas mortgage
Tax Collected at Source
The cost shows up at the bank.
- Remittances under LRS for property purchases attract TCS under the Income-tax Act, according to Paasa
- Matrix Forex puts it at 20% above ₹10 lakh
- A Business Standard piece from late 2024 said 20% applied above ₹7 lakh, which looks like the earlier threshold, so the different figures reflect the date of publication
- TCS isn’t an extra tax in the end, since you can claim credit against your tax liability, but it ties up cash, so confirm the current rate with your bank before remitting
Disclosure in Your Tax Return
This is where people get caught.
- Any resident and ordinarily resident who holds foreign assets, including property, must disclose them in Schedule FA of the income tax return, according to India Law Offices
- Non-disclosure can attract a penalty of ₹10 lakh for each year, under the Black Money Act, according to the same source and Business Standard
- Luxury Properties India says undisclosed assets may be taxed at 30% with a penalty of three times the tax, and that wilful non-disclosure can bring imprisonment of three to ten years
- You must keep reporting every year you hold the property, not just in the year of purchase
Enforcement Is Real
Agencies are looking at Dubai in particular.
- In February 2026, the Enforcement Directorate said it searched high-net-worth individuals under FEMA who had acquired multiple properties in Dubai without corresponding outward remittances through authorised banking channels, according to Luxury Properties India
- Since foreign properties couldn’t be seized directly, equivalent Indian properties were attached
- A tax adviser quoted by Business Standard warned that the source of funds can be questioned in India when a resident sends money abroad
- Using hawala or unreported cash to pay for a property abroad moves you out of the legal route altogether
Using Someone Else’s Limit
A common shortcut is risky.
- Business Standard reports that husbands sometimes send money abroad in a spouse’s name to get past the USD 250,000 limit
- Each family member’s limit is theirs to use with their own funds, so routing money to get around the cap can create problems, though the sources don’t spell out how it’s treated
- Document the source of every rupee and who owns it
When You Sell
The tax follows you.
- Gains from the sale of foreign property by an Indian tax resident are taxable in India, and foreign tax credit is available for capital gains tax paid abroad, according to Business Standard
- Repatriating the proceeds should also go through banks, with the right paperwork
- Foreign inheritance, estate and stamp taxes may apply in the property’s country
Companies and Business Use
Entities have separate rules.
- Indian entities with overseas offices are permitted to acquire immovable property abroad for business purposes and staff residence, according to Adam Fayed
- That’s different from an individual’s personal purchase, and an LRS remittance isn’t meant for property trading as a business
A Practical Checklist
A sensible order helps.
- Check your residential status, since the rules differ for NRIs
- Confirm the source of funds and clear any tax on them
- Decide who will own the property and how many limits you can legitimately use
- Remit through an authorised bank, and keep the purpose code and documents
- Pay TCS, claim credit in your return and report the asset in Schedule FA every year
- Take legal advice in the property’s country on title, taxes and local ownership rules
Where the Sources Disagree
Some points aren’t settled.
- Whether overseas bank loans are allowed, with sources split
- The TCS threshold, which differs by date
- Whether pooling family limits is always acceptable
- Most of these are advisory and real estate marketing pages, so check the RBI’s LRS FAQs and your bank
FAQs
Q1. Is buying property abroad legal in India?
Yes, for resident individuals, through the Liberalised Remittance Scheme, up to USD 250,000 per financial year via an authorised bank, with tax and disclosure obligations.
Q2. Do I need RBI approval to buy property abroad?
Not within the LRS limit. Resident individuals may acquire overseas immovable property up to USD 250,000 a year without prior RBI approval.
Q3. Do I have to declare foreign property in my tax return?
Yes. Report it in Schedule FA every year. Non-disclosure can attract a ₹10 lakh penalty per year under the Black Money Act.
Q4. Can I buy property abroad worth more than USD 250,000?
Yes, by using family members’ limits, paying over several years or using permitted relative loans, but every step must follow FEMA and use legitimate funds.
Q5. Is TCS charged on overseas property purchases?
Yes. Remittances under LRS attract TCS, reported at 20% above ₹10 lakh in a recent explainer, so confirm the current rate with your bank.
