Selling Inherited Property in India: A Guide for NRIs

Inheriting a property is usually associated with the death of a loved one. And while it might be painful inheriting the house where you grew up in or have wonderful memories to cherish might be a balm to the soul. But perhaps not so much if you live outside India. With nobody to take care of it, the house might become more of a liability. In such instances, the best option would be to sell the property. Selling property is never easy, and being an NRI takes the complexity of the process a few levels higher. We give you a step by step guide on how to go about selling your inherited property in India to make it easier for you.

Confirming Ownership

The first step is to ensure that all the documents related to the house point toward you as the new owner of the house. To transfer the title of ownership, you will need a Will, preferably a registered one as this makes it a legal document that can be presented in court if required. If a Will is absent, then you would need to obtain a Succession certificate from the court by submitting relevant documents like a death certificate, bank statements, and identity proofs.

The most important document for the transfer of title, however, is the Khata, which is a record of all the property taxes paid. It is here that ownership details are also updated, which ensures that the right owner gets charged with taxes.

Documents Required for the Sale

Once the transfer of title has been taken care of, the next step is to get all the paperwork related to the house in order. Here is a list.

1. Original purchase deed is one of the most important documents related to the property. If it’s an old property and you are unable to find the original purchase deed, then you would need to obtain certified copies from the registrar.
2. Encumbrance certificate is required to prove that the property is free of debts or other legal liabilities.
3. Occupancy certificate is proof that the building has been constructed as per approved plans and local laws.
4. PAN card is necessary for you to see the sale through. Once the sale is done, a PAN card is required for a Tax Exemption Certificate, which the buyer has to produce after TDS is deducted.
5. NOC should be obtained if the property is located within a society. The members of the society should attest that they have no objection to the sale of the property.

Lastly, if any original documents are missing then you would need to obtain a certificate from a lawyer confirming that you are the owner of the property.

Evaluating the Price of the Property

Arriving at the Fair Market Value (FMV) of the property in question is crucial. Most often this is done by studying the average value of other properties in the neighbourhood. Additionally, considering the Housing Price Index, and the Residential Property Price Index, which are both indices belonging to the RBI, will help you determine a fair price for your property.

However, doing a valuation on your own would still leave you only with an arbitrary figure. We recommend the additional measure of engaging a registered professional property valuator who will be able to give you the most accurate numbers. Government-approved valuators will provide you with a detailed report with all the good and bad factors affecting your property, which will give you a balanced view.

Finishing the Sale

Now that you have everything ready it’s time to begin the process of looking for buyers. Again, engaging a real estate firm to follow through makes the most sense. They would charge a percentage of the sale as their fees, but they will identify, negotiate, and manage all the documentation for wrapping up the sale end-to-end.

Sorting out Taxation

Successfully selling the house is a big relief but your work is not done yet. Sorting out the proceeds of the sale and its taxation is the last but crucial step. NRIs will have to pay capital gains tax on selling property in India. If the property is being sold within two years of purchase, it will attract short term capital gains tax, and if it’s sold after three years from purchase, it will attract long term capital gains tax.