NRI Inheritance for Real Estate or Property in India: All You Need to Know

Navigating NRI inheritance laws in India for real estate can feel like unravelling a ball of legal yarn—twisted, tricky, but absolutely crucial.

As someone who’s been working with clients on property and legal content for over 15 years, let us assure you: you’re not alone in feeling overwhelmed.

Whether you’re an NRI who’s just inherited property in India or someone preparing for the future, this blog is your one-stop, jargon-free guide to understanding how inheritance of property works in India for NRIs, from legal steps to taxes to selling the property and even repatriating your money abroad.

What Types of Property Can NRIs Inherit in India?

Let’s begin at the start: What kind of property are you even allowed to inherit as an NRI?

Good news—India doesn’t discriminate against NRIs when it comes to inheritance. You, as an NRI, can inherit:

• Residential properties – Houses, flats, apartments, bungalows
• Commercial properties – Shops, office spaces, showrooms
• Agricultural land – Yes, even farmland!
• Plantation property
• Farmhouses

The inheritance can come from any resident of India, another NRI, or even a Person of Indian Origin (PIO).

Now, whether it’s ancestral property or self-acquired by the original owner, NRI inheritance laws in India for real estate treat both the same—as long as the inheritance is through a Will or under intestate succession (if the person died without a Will).

Legal Steps: Transferring Ownership in Your Name Post Inheritance

Alright, so you’ve inherited a flat or a piece of land—what now? It doesn’t automatically mean it’s legally yours. You’ve got to get it transferred in your name, and here’s how:

1. Obtain the death certificate of the person from whom you’ve inherited the property.
2. If there’s a registered Will, apply for probate through the court (mandatory in cities like Mumbai, Chennai, and Kolkata).
3. If there’s no Will, apply for a succession certificate or legal heir certificate.
4. Get the property mutated in your name at the local municipal authority. This officially changes the ownership in the government’s records.

The process may vary slightly depending on whether you’re inheriting from a Hindu, Muslim, or Christian person, due to personal succession laws.

And remember—having your name in the will isn’t enough. It must be followed through with legally recognised documentation. This is the foundation that allows you to later sell the property, rent it out, or claim tax benefits.

Can You Sell Inherited Property in India as an NRI?

Absolutely! Once the property is legally transferred to your name, you have every right to sell it. However, selling inherited property as an NRI brings in its own set of challenges—especially when it comes to capital gains tax and repatriating money abroad.

You’ll want to keep these in mind:

• The property must be held for more than 24 months (even if by the original owner) to qualify as a long-term capital asset.
• You must provide legal documentation of inheritance before sale (Will, probate, death certificate, and mutation).
• The buyer will deduct TDS at 20% (plus surcharge and cess) before making payment.

Pro Tip: Always get a Chartered Accountant (CA) Certificate in Form 15CB and submit Form 15CA online before repatriating the funds.

Tax Liability for Inherited Property as an NRI

Here’s where most NRIs get nervous—the tax implications. So, let’s break it down.

1. There is NO inheritance tax in India. That’s right—simply inheriting property does not attract any tax.
2. However, when you sell the inherited property, capital gains tax comes into play.
3. If you rent out the property, the rental income is taxable under Income from House Property.

Let’s get into the juicy stuff now.

Capital Gains Tax at the Property for NRI

If you sell the inherited property, you’re liable to pay Capital Gains Tax. It’s calculated based on the difference between the sale price and the cost of acquisition (adjusted for inflation).

Since you didn’t buy the property, the cost of acquisition is the price at which the original owner purchased it. If it was bought before 2001, you’re allowed to use the Fair Market Value (FMV) as on 1st April 2001.

There are two types of capital gains:

• Short-Term Capital Gains (STCG) – If held for less than 2 years. Taxed at slab rate.
• Long-Term Capital Gains (LTCG) – Held for over 2 years. Taxed at 20% + surcharge + cess with indexation benefit.

How to Save Capital Gain Tax on Property

Nobody likes giving away a chunk of their inheritance to taxes, right? So here’s how you can legally save capital gain tax on property:

1. Invest in Another Property (Section 54)

If you sell a residential property, you can invest the capital gains in another residential property in India within:

• 1 year before the sale, or
• 2 years after the sale, or
• Construct a new one within 3 years.

2. Invest in Capital Gains Bonds (Section 54EC)

You can invest up to ₹50 lakhs in NHAI or REC bonds within 6 months of sale. These bonds have a 5-year lock-in, but the gains become fully exempt from tax.

Just remember—you’ll still have to file your income tax return in India for the year in which the property is sold.

Suggested Read:

Guidelines for NRIs to Buy Property in India: Legal Tips, Rules & Must-Know Insights

Repatriation of the Sale Proceeds After Selling the Inherited Property

One of the biggest questions NRIs have is: Can I take the money abroad after selling inherited property?

Yes, you can! But only after fulfilling a few conditions.

Documents Required:

• Proof of inheritance (Will, legal heir certificate)
• Sale deed
• Tax Deducted at Source (TDS) certificates
• Chartered Accountant Certificate (Form 15CB)
• Online submission of Form 15CA on the Income Tax Portal

Limits & Channels:

• You can repatriate up to USD 1 million per financial year per person out of inherited assets.
• Funds must be routed through NRO (Non-Resident Ordinary) account.
• For higher amounts, special permission from RBI (Reserve Bank of India) is needed.

Note: The sale proceeds must first be deposited in your NRO account, and only then can they be repatriated abroad, subject to documentation.

Final Thoughts: Plan Ahead and Stay Compliant

Dealing with NRI inheritance laws in India for real estate isn’t just about paperwork—it’s about protecting what’s rightfully yours while staying legally and financially secure.

Here’s what you should always remember:

Always get legal paperwork (Will, probate, mutation) in order
Know the types of property that NRIs can inherit
Understand the tax liability for an inherited property as an NRI
Be strategic about how to save capital gain tax on property
Follow due process for repatriation of the sale proceeds after selling the inherited property

Still feeling unsure? That’s completely normal. It helps to consult with an experienced property lawyer and a Chartered Accountant who understands cross-border taxation laws.

But now, at least, you’re not starting from scratch.

Have you recently inherited property in India or plan to? Let us know your questions or experiences in the comments – The Chambers of Ashwarya Sinha would love to hear your story and help where abide by the law!

At the Chambers of Ashwarya Sinha, we bring a wealth of experience in handling legal complexities surrounding such matters. Feel free to reach out to us at: info@ashwaryasinha.com and office@ashwaryasinha.com or you can call us at +91 11-41618119.