Buying Property Abroad: LRS & FEMA Rules for Resident Indians
Last verified: June 2026, against RBI Liberalised Remittance Scheme / FEMA rules and the Budget 2025 TCS changes cited below. These rules change often and individual cases vary — confirm with your authorised dealer bank or a qualified advisor before acting. This is general information, not personal financial advice.
Dreaming of a holiday home in Dubai, an apartment in London, or a rental unit in the US? Resident Indians can legally buy property abroad — but only through the right channel and within strict limits. The route is the RBI’s Liberalised Remittance Scheme (LRS), and getting the FEMA rules wrong can mean penalties. Here is how it works.
The limit: USD 250,000 per person, per year
Under LRS, each resident individual can remit up to USD 250,000 per financial year for permitted capital-account transactions, which includes buying immovable property abroad. The limit is per person, so family members can each remit their own quota — two spouses can together send up to USD 500,000 a year, and two to four residents can jointly buy a property, each remitting from their own account.
Funding rules — and the loan restriction
The money must come from your own funds remitted under LRS. A key restriction: as a resident, you generally cannot take a loan in India to fund an overseas property, and you are not an eligible borrower for overseas foreign-currency loans under FEMA’s external-commercial-borrowing framework. In practice, buyers either pay from accumulated LRS remittances over multiple years or arrange finance from a foreign lender abroad, keeping any repayments routed from India within the annual LRS limit.
TCS on the remittance
Buying property is an investment purpose, so 20% TCS applies on the amount you remit above ₹10 lakh in a financial year (the threshold raised in Budget 2025, effective 1 April 2025). TCS is not an extra cost — it is adjusted against your income tax and refunded if excess when you file your ITR.
What happens after you buy
- Rental income earned abroad can be retained and reinvested overseas, but it is taxable in India for a resident and must be reported.
- Sale proceeds can be reinvested abroad within FEMA rules, or brought back to India.
- You must disclose the foreign property and any income in Schedule FA of your ITR — non-disclosure carries serious penalties under the black-money law.
- Capital gains on sale are taxable in India; relief for tax paid abroad may be available under a DTAA.
Spending over multiple years
Because the cap is annual, many buyers accumulate funds in a foreign account over two or three years to assemble the purchase amount — each year’s remittance counting against that year’s USD 250,000.
FAQs
Can a resident Indian buy a house abroad?
Yes, through the LRS, up to USD 250,000 per person per financial year, for permitted purposes including immovable property.
Can I take a home loan in India to buy property abroad?
No. Residents generally cannot use Indian borrowings or be overseas FCY borrowers for this; you fund it from your own LRS remittances or a foreign lender abroad.
Is there TCS on buying property abroad?
Yes — 20% on the remittance above ₹10 lakh in a year, creditable against your income tax.
Do I have to declare the foreign property in my ITR?
Yes, in Schedule FA. Foreign assets and income must be reported by residents.
