Overseas property is claiming a larger share of Indian investors’ wealth, reflecting growing interest in global diversification of the real estate portfolio, rental income and residency opportunities. According to Knight Frank India–IREX’s Keys Beyond Borders survey, which covered around a hundred high-intent buyers, 84 per cent of whom already own a house abroad, foreign real estate accounts for 13 per cent of respondents’ wealth, up from approximately 5 per cent a decade ago. Real estate, including domestic property, accounts for 45 per cent of their wealth allocation.
The shift is accompanied by a rise in money sent abroad for property purchases. Remittances by Indian residents for overseas real estate increased 64 per cent year-on-year to $528.7 million in 2025-26, even as overall outward remittances declined marginally, according to data cited in the report.
For prospective buyers, the decision to invest in foreign real estate involves more than identifying a promising property or a market offering attractive returns. Foreign-exchange limits, taxation in India and the destination country, currency movements, maintenance expenses and resale prospects can significantly influence the investment’s financial viability.
Why investors are looking abroad
Overseas property serves several purposes, ranging from wealth diversification and business expansion to rental income, children’s education and lifestyle needs. Residency programmes are another consideration. Gateway markets such as London, New York and Dubai have traditionally attracted affluent Indian buyers, while Thailand is emerging as an alternative.
“Overseas property is about a business need, diversifying wealth, managing risk and creating lifestyle opportunities,” says Ashwin Chadha, chief executive officer (CEO), India Sotheby’s International Realty.
The survey indicates that 61 per cent of respondents considering overseas residential property are motivated by rental income and capital appreciation. Residency and Golden Visa opportunities also rank prominently among the broader factors shaping purchase decisions. However, property ownership does not automatically confer residency or citizenship; eligibility depends on the destination country’s rules and the specific programme.
Currency diversification is another attraction. Assets denominated in dollars or pounds may help investors safeguard their wealth against the weakening of the rupee. But currency movements can also affect the cost of purchasing the property, and servicing a foreign-currency loan.
“Buy with a clear purpose, whether it is for a child’s education or an overseas business base, rather than just chasing currency benefits,” Chadha says.
The property may also serve different purposes over time, transitioning from a child’s student accommodation to a holiday home or a rental asset. Such flexibility, however, should be weighed against the cost of maintaining a property that the family may not use throughout the year.
Match the property to the budget
The survey suggests that overseas property is not confined to ultra-luxury buyers, although the investment still requires substantial capital. About 85 per cent of respondents plan to invest between $250,000 and $1 million, while apartments and condominiums are the preferred property types.
The budget also depends on the destination and the segment. In the high-end luxury market, India Sotheby’s International Realty’s portfolio includes developments in Thailand starting at $1 million, UK apartments priced between £1.25 million and £5 million, and New York properties listed between $1 million and $7 million.
“Judge returns after tax and costs, not on the headline yield,” Chadha says.
Investors should calculate expected rental income after accounting for local property taxes, management charges, maintenance, insurance and periods without tenants. They should also assess transaction costs and the likely time required to sell the property. An attractive advertised yield may not translate into a comparable net return.
A purchase should not depend entirely on optimistic assumptions about appreciation. Buyers need to examine local tenant demand, the property’s resale potential and whether they can afford to hold it through a period of weak demand or falling prices.
Understand the LRS limit before committing
For resident individuals, the Reserve Bank of India’s Liberalised Remittance Scheme (LRS) permits remittances of up to $250,000 per financial year per individual for permitted transactions, including eligible overseas property purchases. This is a combined limit covering permitted remittances for different purposes, not a separate allowance for real estate.
“Work backwards from the payment schedule before signing,” says Moin Ladha, partner, Khaitan & Co.
A buyer who has already remitted money for overseas travel, education or other permitted investments will have less of the annual limit available for a property. The payment schedule should therefore be mapped against the available allowance before a purchase agreement is signed.
Family members can pool their remittance limits, subject to applicable conditions. For a property purchase, each contributing family member should be a co-owner and independently comply with the LRS requirements. Buyers should not assume that placing the property in an overseas company or arranging developer financing will automatically remove the remittance constraint.
“Do not assume that an overseas company, mortgage or developer-financing plan is permissible simply because it is available locally,” Ladha says.
Each arrangement requires scrutiny under the Foreign Exchange Management Act (FEMA), and a foreign special-purpose vehicle is not a workaround for the LRS limit. Investment in entities engaged in prohibited real estate activities is also not permitted.
Payments should be routed through an authorised dealer bank using the appropriate purpose code and supporting documents. These include the sale agreement, payment schedule, PAN, Form A2 and source-of-funds records. If the purchase price exceeds the available remittance limit, the payment plan may need to be spread across financial years, subject to the applicable rules and contractual terms.
Unused foreign exchange generally needs to be repatriated within 180 days unless it is permissibly reinvested. Buyers should also keep ownership documents, remittance records and the declared purpose of the transaction consistent.
Factor in TCS and Indian tax obligations
Tax collected at source (TCS) is an important part of the purchase budget. Under the applicable LRS provisions, remittances for overseas property attract TCS at 20 per cent on the aggregate amount exceeding Rs 10 lakh during the relevant annual period. The authorised dealer bank collects the amount. TCS is generally available as credit against the taxpayer’s liability, subject to the applicable provisions, but it increases the upfront cash requirement.
“Budget for TCS alongside the purchase price. It is creditable against tax liability, but it creates a substantial upfront cash requirement,” Ladha says.
Tax reporting does not end with the remittance. Resident and ordinarily resident taxpayers must disclose overseas property in Schedule FA of their Indian income-tax return, even if the asset does not generate rental income. Paying for it with money on which Indian tax has already been paid does not remove the reporting obligation.
“Completing the bank’s LRS formalities does not fulfil these tax obligations,” says Suresh Surana, a Mumbai-based chartered accountant.
Surana says investors must determine their residential status separately under FEMA and income-tax law. FEMA status depends not only on the number of days spent in India but also on the purpose and intention behind the person’s stay or departure. Income-tax status, meanwhile, determines whether the taxpayer is resident and ordinarily resident, resident but not ordinarily resident, or non-resident.
Foreign rental income and capital gains must generally be considered for Indian taxation when the taxpayer is taxable on global income. The fact that the money remains abroad does not, by itself, remove the reporting obligation. Eligible foreign-tax credit may be claimed, subject to prescribed documentation and filings.
“Maintain the purchase agreement, ownership documents, bank remittance advice and source-of-funds records,” Surana says. Rental statements, foreign tax receipts, TCS details and records of improvement expenses should also be preserved, including for calculating capital gains when the property is eventually sold.
Foreign taxes and geopolitical risks can erode returns
Indian compliance is only one part of the equation. Buyers must understand the destination country’s ownership rules, property taxes, transaction charges and tax treatment of rental income and capital gains. Chadha identifies high foreign-buyer stamp duties in the UK, US FIRPTA withholding requirements and estate taxes that can reach 40-50 per cent in certain jurisdictions as issues requiring careful assessment. Their applicability and impact depend on the individual circumstances and local rules.
Geopolitical uncertainty and economic conditions can add another layer of risk. Chadha says regional conflict and economic uncertainty have cooled demand for homes in Dubai. Higher oil prices, inflation and borrowing costs can weaken housing demand and increase mortgage rates, creating additional timing risk for leveraged buyers and investors dependent on rental yields.
“Conduct due diligence by verifying title deeds, uncovering encumbrances and assessing resale potential,” Chadha says. Buyers should engage local experts, check developer credentials and delivery records, evaluate tenant demand and commission a structural survey to identify problems that may not be apparent from marketing material.
The case for overseas property ultimately rests on how well it serves an investor’s wider financial and family objectives. A disciplined purchase begins with affordable funding and a clear purpose, followed by a realistic assessment of net returns, legal obligations and the ability to hold the asset through uncertain market conditions.
 "Check funding limits and net returns before buying property overseas")
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