NRI Co-Owner? Your Property Tax Bill Splits 2 Ways

When an NRI and a resident Indian jointly sell a property, each co-owner is taxed separately based on their own residential status. The NRI faces stricter rules — including TDS deduction — while the resident co-owner can claim reinvestment exemptions independently.

Here's what happened: When a property is jointly owned, each co-owner's capital gains tax liability is determined by their own residential status — NRI or resident Indian — not by the property's location.. Buyers purchasing property from an NRI must deduct TDS at 20% on long-term capital gains attributable to the NRI's share, which can affect the entire sale transaction if not planned in advance.. A resident co-owner can independently claim the Section 54 reinvestment exemption on her share of the gains, regardless of whether the NRI co-owner chooses to reinvest or not..

What you should do: Calculate each co-owner's proportionate share of capital gains before finalising the sale deed — ownership ratio in the registered document determines how gains are split.. Apply for a lower or nil TDS deduction certificate (Form 13) from the Income Tax department well before the sale closes, so the buyer does not deduct TDS at the full 20% rate on the NRI's share.. Resident co-owners should independently document their reinvestment plan under Section 54 or deposit funds in a Capital Gains Account Scheme before the ITR filing deadline to protect the exemption..

An NRI can repatriate the net sale proceeds abroad, but only up to the original cost of acquisition per year — any amount above that requires RBI permission via an authorised dealer bank.

For readers weighing their credit and loan options, our personal loan guide and CIBIL score resources put this update in context.