Let's look at the rules and regulations as applicable to the real estate sector. Property investment in India, almost regardless of geography has been an immensely profitable avenue. A vast majority of NRIs are keenly interested in the real estate space --- either they are looking to buy property in India or sell property that they owned (before becoming NRIs) or inherited during the time that they were abroad.

Buy as many properties as you wish
There is a perception amongst some NRIs that they can buy a maximum of two houses in India. There is absolutely NO restriction on the number of houses that an NRI or even a Person of Indian Origin (PIO) can buy or sell --- only agricultural land remains out of bounds.

Also, the RBI has given a general permission in this regard, there is no requirement of notifying any authority or filing any paperwork for your real estate transactions.

Just the one restriction applies --- a PIO ie, an NRI who is a foreign citizen cannot sell his house to another NRI or a PIO --- he has to necessarily sell the property back to a Resident.

When property is sold, depending upon the holding period, you will either earn short-term or long-term capital gains. If you sell the property after three years of purchase, the gain will be long-term else it will be short-term.

In either case, once the tax is paid, the money is freely repatriable. A certificate from a Chartered Accountant (CA) needs to be submitted to the bank --- there is a specific format for such certificate --- which of course the bank can provide. Once the CA certifies that the tax has been provided for, the net sale proceeds can be repatriated.

However, NRIs can buy or sell any number of properties, but repatriation is restricted to just two. This is a major issue that has to be considered carefully before you buy property in India.

If you intend to purchase more than two properties, then to maintain repatriation rights,  the third property onwards must be bought in the names of your other family members. This way husband and wife can buy four properties --- husband, wife and two kids can potentially buy eight properties and still maintain 100% repatriation rights.

Taxation and real estate
When you sell property after three years, you earn long-term capital gains. Tax on this can be saved by doing either of the following two things:

1. Invest in specific capital gains tax saving bonds as the tax is fully exempted. These bonds are currently being issued by the National Highway Authority of India and Real Estate Concepts (REC). There is a lock-in period of 3 years for the bonds after which the money (invested in the bonds) can be remitted abroad too.

2. Invest the capital gain amount in another property. You have two years from the date of sale to identify the property and invest in it. Till such time the money has to be deposited in a special account known as the Capital Gains Account Scheme (CGAS) --- any withdrawal from CGAS should only be for payments to be made in relation to the new property.

Also, it makes sense to buy property using mortgage finance. Tax breaks are available on the interest payment. For the first property interest payable is tax deductible up to Rs 150,000, however from the second property onwards, the entire interest without any limit is tax deductible

Now one may think since one doesn't have any Indian income, the tax break is meaningless. That may be so now, however, this tax break can be carried forward for all of 8 long years. So assuming you return to India in the interim or do start earning Indian income, cumulative interest paid for the past few years would be sitting pretty for you to knock off against your Indian income. Therefore, even if you do not have any immediate use for the tax break --- it makes sense to avail of it anyway.

Remember however, to file your tax return in time --- the aforementioned tax break cannot be carried forward if the tax return hasn't been filed in time.