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Step by step guide for NRIs to sell inherited property in India

Step by step guide for NRIs to sell inherited property in India

In an earlier article we looked at how Non Resident Indians (NRIs) can transfer title on inherited property to their name. Having done that, selling inherited property can be quite challenging, especially if you have left India many years ago and are not familiar with the procedure.

In this two-part series, we outline the entire process step-by-step, beginning from the time you inherit the property. In part one, we will look at what documents you need, how you can arrive at the sale value and how to complete the sale transaction. In part two, we will look at tax implications and repatriation rules.

Step 1: Transfer title of inherited property to your name

When you inherit property, the first thing you must do is to transfer the title of the property to your name. You can do this by a process called 'mutation of revenue records.' You would need either a copy of the Will or in absence of a Will a Succession Certificate issued by the local court.

We have seen this process in detail in an earlier article. You can refer to it here.

Step 2: Get documents in order

Once you have transferred the title of the inherited property, you need to put together all the papers that are needed in order to sell the property. Here's a list:

- Original purchase agreement

This is the title document of the property.

- Original share certificate in case of residential unit in a co-operative society

A share certificate is issued by the co-operative housing society to each member. In case this certificate has been misplaced, the member must apply to the society for a duplicate. The member would need to indemnify the society for all costs and give an undertaking that the property is not mortgaged. He would also need to publish a notice in the newspaper and in the society notice boards so that it is clear that no objections exist.

- No objection certificate from the society

The certificate confirms that members of the society do not have any objections to the sale of the apartment. It should also confirm that the seller has no default/outstanding payments to be made to the Society as of date. "Usually this is received once the buyer is finalized as the society gives an NOC stating that it does not have any problem in the owner selling the property to the buyer)," explains Amar Shah, Co-founder of property consultancy firm Golden Abodes.

- Copy of approved plan and occupation certificate issued by the concerned authority such as a municipal corporation

- Lawyer certificate

In the absence of originals of the above documents, the seller must approach a lawyer who would help him with a certificate to prove that he is indeed the rightful owner of the property. "The lawyer would take out a search and title report of the property. This report will track the owners of the property over the last 3-5 decades by tracking records in government registry offices. He will then place a public notice in a regional language and English/Hindi newspapers and wait for the prescribed period of time to see if anyone is claiming rights for the said property. After that, if the search and title report shows the seller as the final title bearer and no objections/claims are raised, he would issue a certificate mentioning that the seller is the rightful owner of the property" Shah explains.

A Permanent Account Number (PAN) is a must for all big ticket transactions in India. "An NRI must get a PAN for making the sale of property as after sale of property, it will be required to apply for Tax Exemption Certificate under section 197. If he does not have a PAN, he can apply for one by sending the signed application along with copies of ID and address proof documents," says Shah.

PAN application form is available here. Indian citizens can apply for PAN by using form 49A while foreign citizens can use form 49AA. You can furnish a foreign communication address while applying for your PAN card. Currently PAN cards are issued to addresses in select countries.

"In the absence of a PAN, the NRI can also furnish Form 60 at registrar office," adds Vaibhav Sankla, Director, H&R Block India.

Step 3: Identify your preferred sales method

In order to carry out the sale transaction, an NRI must decide whether he wants to do it himself or use the services of a professional company or firm. Unless you have close relatives or friends in India who you can trust, it might not make sense to venture out on your own. "The real estate space in India is unregulated.Property rates vary vastly even within a particular area. There is no license for brokers and the entire process can be cumbersome if one is not familiar with the market. The most important thing for a successful transaction is to be in the right hands," says Om Ahuja CEO - Residential Services, Jones Lang LaSalle India.

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