NRE vs NRO vs FCNR: Which Account for Property?
Three-letter accounts, very different rules. Choosing wrong slows every transaction. Here is the plain comparison for property money.
| NRE | NRO | FCNR | |
|---|---|---|---|
| Holds | Foreign income (INR) | Indian income like rent (INR) | Foreign currency term deposit |
| Repatriation | Free | Up to USD 1M / year | Free |
| Interest tax | Tax-free in India | Taxable in India | Tax-free in India |
| Currency risk | Yes (INR) | Yes (INR) | No (held in FX) |
Which to use when
- Buying with foreign funds: route through NRE (keeps proceeds freely repatriable later).
- Rent collection: NRO — Indian-source income lives here.
- Sale proceeds of resident/inherited property: NRO, then repatriate within the USD 1M cap.
- Parking foreign currency without INR risk: FCNR.
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FAQs
What is the difference between NRE and NRO accounts?
NRE holds foreign income in INR and is freely repatriable with tax-free interest; NRO holds Indian income like rent, has taxable interest and a USD 1 million annual repatriation cap.
Which account should an NRI use to buy property?
Buy with foreign funds routed through an NRE account so the eventual sale proceeds remain freely repatriable; collect rent in NRO.
Is FCNR interest taxable in India?
No — FCNR (foreign-currency) deposit interest is tax-free in India, and the deposit carries no INR currency risk.
Where do property sale proceeds go?
For property bought as a resident or inherited, proceeds go to NRO and are repatriable up to USD 1 million per year; NRE-funded purchases can repatriate freely.
NRE, NRO or FCNR — which account for property?
An NRE (rupee, funded from abroad) is freely repatriable and is the clean route for bringing fresh funds in to buy; an NRO holds India-sourced income like rent and sale proceeds and is repatriable up to USD 1 million a year with the right paperwork; an FCNR holds foreign currency as a term deposit. For a property purchase you typically fund from NRE or normal banking channels, and receive rent or sale proceeds into NRO.
How does the account choice affect buying and repatriation?
It decides how cleanly money comes in and goes out. Buy from NRE or inward remittance and repatriation later is straightforward; receive sale proceeds into NRO and you repatriate under the USD 1M scheme with a CA's Form 15CB and TDS handled. We keep a chartered accountant on the funding and repatriation so the banking is FEMA-clean from the first transfer.
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