Q.866 Property to rent in India

by UK resident . . .

Question: Dear Sir I (NRI-UAE) came across your website and would like to inquire. • a property in India owned by my mother (UK resident) • father (NRI) expired and we transferred the property to my mother • she is retired and earns social security in UK • i have siblings residing in UK (sister and brother, both independent) we have been considering if renting this property in India would be easy task, but are not sure if we have all relevant information. my questions: • is a lease and license the best option • we were informed by well wishers that there might be taxable amounts involved • can the agreement be drawn without attracting taxes on my mothers name • how can we verify the process through agent/broker is legally correct • what is the process of giving this property to rent appreciate your replies here by email thanks Charu [March 14, 2016] Answer: No response to questions is sent by email. Answers are posted on this website so as to benefit other readers of this website who may need information on similar issues. Regarding your questions: Yes! in my opinion leave and license is the best option. I have an article on this website that shows a comparison between ‘Leave & License’ and a Lease/Rental Agreement. To view article CLICK HERE or visit http://nriinformation.com/articles3/nri_rent als.htm Taxes would be involved in India only if the income from rent is above the taxable tax free income allowed, this is currently Rupees 2,50,000 per financial year. Even if the rent received is slightly over the 2.5 lakh amount, there are certain expenses related to the cost of renting, maintenance etc that can reduce the rental income as far as taxation goes. Check with an accountant in this regard. Agreement can be drawn on any name if your mother gives a power of attorney. Tax liability although will be on the owner. Agent/brokers dealing in property matters in India do not have the same norms as UK real estate brokers. So don’t get mislead. There is no definite way to verify a broker/agent in India other than by someone who has dealt with them. This is my opinion, regardless of assurances people may provide, you will be dealing with agents brokers at your own risk. You always have an option to consult with a lawyer. The best option in such matters is to educate yourself before acting. Giving property out on rent is easy in India but finding the right tenant is no easy task. Property brokers will find you a tenant or you can advertise. Generally brokers charge one month rent for their services and this is usually paid only by the party that is renting. Be very careful who you rent to and verify everything before handing over possession. You should get a lawyer for your leave and license drafting and then get the agreement registered to give it legal protection. If in doubt don’t rent!