Indian residents can legally send money abroad to invest in U.S. real estate. The Reserve Bank of India allows this through the Liberalised Remittance Scheme, commonly called LRS.
Under LRS, each eligible resident individual can remit up to US$250,000 during one Indian financial year, which runs from April 1 to March 31.
The limit can be used for permitted overseas expenses and investments. This includes buying property outside India and investing in an overseas entity that owns property, provided the investment follows the applicable FEMA and overseas investment rules.
The process is legal, but the ownership structure, bank documents, tax collection and future reporting must be handled correctly.
What Is the Liberalised Remittance Scheme?
LRS is the official RBI route through which resident individuals can send money outside India.
It can be used for several permitted purposes, including education, medical treatment, travel, gifts and overseas investments.
For real estate investors, LRS can be used in two main ways:
- To buy a property outside India directly.
- To invest in a foreign company or property-specific entity that owns the property.
The second route is commonly used in fractional U.S. real estate. Instead of buying the entire building, the investor acquires an ownership interest in the legal entity that holds the property.
LRS is available to resident individuals, including minors. It is not available to companies, partnership firms, Hindu Undivided Families or trusts.
How Much Can One Person Send Under LRS?
One resident individual can remit up to US$250,000 during one financial year.
This is the total LRS limit for all eligible remittances made during that year. It is not a separate limit for each purpose.
For example, suppose an investor has already remitted US$40,000 for a child’s education during the financial year. The investor would have up to US$210,000 of the LRS limit left for other eligible purposes, including an overseas property investment.
The investor can make one large remittance or several smaller remittances. The combined amount cannot exceed US$250,000 during the financial year.
Bringing an earlier investment back to India does not restore the limit for the same year.
How LRS Works for One Family Member
Consider a family in which only the husband wants to invest.
He can remit up to US$250,000 during the financial year, provided he has not already used part of his LRS limit for another purpose.
The funds must be remitted from his bank account. His name must appear as the owner, co-owner or investor in the relevant property or investment entity.
He cannot use his wife’s LRS limit while keeping the entire investment only in his own name.
How LRS Works for Two Family Members
Now consider a husband and wife who want to invest together.
Each person has an individual LRS limit of US$250,000. Together, they can remit up to US$500,000 during one financial year.
This is allowed when:
- Both are eligible resident individuals.
- Each person remits funds from their own bank account.
- Each person has enough unused LRS limit.
- Both become co-owners or co-partners in the investment.
- Their ownership reflects their respective contributions.
For example, if the husband remits US$250,000 and the wife remits US$150,000, their combined investment is US$400,000. Their ownership documents should reflect the amount contributed by each person.
One spouse cannot simply transfer US$500,000 from one account by using both limits.
How LRS Works for More Family Members
The total amount can increase when more eligible adult family members invest together.
For example:
- One adult family member can remit up to US$250,000.
- Two adult family members can remit up to US$500,000.
- Three adult family members can remit up to US$750,000.
- Four adult family members can remit up to US$1 million.
Each family member must use their own bank account and their own available LRS limit.
Each member must also become a genuine co-owner or co-partner in the investment. The ownership cannot remain entirely with one person while the other family members are used only to increase the remittance amount.
The family should also check whether any member has already used part of the annual LRS limit for education, travel, gifts or another overseas investment.
Can Family Members Combine Their LRS Limits to Buy One Property?
Yes. RBI rules allow eligible resident relatives to combine their LRS remittances for the purchase of one overseas property.
The same principle applies when family members acquire interests in a property-owning entity. Each contributing family member must be shown as a co-owner or co-partner in the investment.
For example, a husband, wife and adult son can invest together.
If each contributes US$200,000, the family can invest a total of US$600,000. The property documents or entity records should show all three investors and their ownership percentages.
The ownership could be divided equally if they contribute equally. If their contributions are different, the ownership should normally reflect those differences.
Can LRS Be Used for Direct and Fractional U.S. Real Estate?
Yes, but the remittance is classified differently depending on what the investor is buying.
When an investor buys a U.S. property directly, the remittance relates to the purchase of overseas real estate.
When an investor buys an interest in a U.S. LLC or another property-owning entity, the investor is acquiring overseas equity rather than taking the property title directly.
This distinction matters because the bank must use the correct purpose code and review the correct set of documents.
The investor should not choose the purpose code based only on a general internet list. The platform and the authorised dealer bank should confirm the code after reviewing the exact ownership structure.
How to Send Money Under LRS
The outward remittance process follows a clear sequence.
Step 1: Confirm What You Are Buying
First, understand whether you are buying a property directly or investing in an entity that owns the property.
Ask for documents that clearly show:
- The name of the property.
- The legal owner of the property.
- The entity in which you will invest.
- The percentage or number of interests you will own.
- The bank account receiving the funds.
This information helps the bank classify the remittance correctly.
Step 2: Check Your Available LRS Limit
Review all LRS remittances already made during the financial year.
These can include education, travel, gifts, foreign investments and other eligible transfers.
Subtract those earlier remittances from US$250,000 to calculate the amount still available.
Each family member must perform this calculation separately.
Step 3: Complete KYC and Source-of-Funds Checks
The bank and the investment platform will normally ask for identification and financial documents.
These can include:
- PAN.
- Aadhaar or passport.
- Proof of address.
- Bank statements.
- Income tax returns.
- Proof showing where the investment money came from.
- Investment or subscription documents.
The bank needs to confirm that the funds belong to the person making the remittance.
An authorised dealer bank cannot provide a loan specifically to fund an LRS capital-account remittance.
Step 4: Complete Form A2 and the LRS Declaration
Form A2 records the reason for the outward remittance.
The investor must provide accurate information about the amount, beneficiary, destination and purpose.
The investor also declares that the funds belong to them and that the total remittance remains within the LRS limit.
The bank relies on this declaration while reviewing the transaction, but the investor remains responsible for giving correct information.
Step 5: Submit the Investment Documents
The bank may ask for:
- The property purchase agreement.
- The LLC or SPV subscription agreement.
- The offering documents.
- The beneficiary’s bank details.
- The ownership structure.
- The platform or sponsor details.
- The expected use of funds.
The documents required can differ between banks and investment structures.
Step 6: Use the Purpose Code Confirmed by the Bank
A direct property purchase and an equity investment in a property-owning LLC use different classifications.
The authorised dealer bank should confirm the purpose code after reviewing the documents.
Using a travel, gift or another unrelated purpose code for an investment can create FEMA and tax-reporting problems.
Step 7: Pay the Applicable TCS
Tax Collected at Source, or TCS, can apply to LRS remittances.
As of June 2026, no TCS applies when a person’s total LRS remittances remain within ₹10 lakh during the financial year.
For most investment remittances, the bank generally collects TCS at 20% on the amount above ₹10 lakh.
For example, suppose an investor wants to remit ₹30 lakh for a U.S. real estate investment and has made no earlier LRS remittance during the year.
The first ₹10 lakh falls within the threshold. TCS applies to the remaining ₹20 lakh.
At 20%, the TCS amount would be ₹4 lakh.
The investor would therefore need approximately ₹34 lakh, plus bank and foreign exchange charges, to complete a ₹30 lakh investment remittance.
TCS is not an additional investment charge. It is tax collected in advance and recorded against the investor’s PAN. The investor can claim it as credit when filing the Indian income tax return. If the credit is higher than the final tax liability, the balance can be claimed as a refund.
The cash remains unavailable until it is adjusted or refunded, so investors should include TCS in their funding plan.
Step 8: Keep the Remittance Records
After the transfer, keep copies of:
- Form A2.
- The LRS declaration.
- Bank debit advice.
- SWIFT or wire confirmation.
- TCS certificate or Form 26AS record.
- Subscription or ownership documents.
- Property reports.
- Distribution statements.
- U.S. tax documents.
These records will be needed when reporting the foreign investment and income in India.
What Happens After the Investment Is Made?
After the funds reach the United States, the investor should receive confirmation of ownership.
For a direct purchase, this can include the property title and closing documents.
For a fractional investment, it can include the subscription confirmation, ownership register and documents showing the investor’s interest in the LLC or SPV.
The sponsor or platform should provide regular information about:
- Rental income.
- Property expenses.
- Distributions.
- Occupancy.
- Major repairs.
- Loan performance.
- Progress under the property business plan.
The investor should retain these records even when no income is distributed during the year.
How Is Foreign Property Reported in India?
Indian residents who hold foreign assets or receive foreign income must use an income tax return that contains the relevant foreign asset schedules.
Schedule FA is used to report foreign assets.
Schedule FSI is used to report income from foreign sources.
Schedule TR is used when claiming relief for foreign taxes paid.
Form 67 is required when the investor claims foreign tax credit in India.
ITR-1 and ITR-4 do not contain Schedule FA. Investors with foreign assets should confirm the correct return form with a chartered accountant.
The reporting category depends on how the investment is held.
A directly owned property is reported differently from an ownership interest in a U.S. LLC. The investor should give the complete ownership and tax documents to a CA who understands foreign assets.
Can Rental Income and Sale Proceeds Be Brought Back to India?
Yes. Rental distributions and sale proceeds can be sent to India through normal banking channels after applicable expenses and taxes.
Depending on the investment structure, income can also be retained or reinvested overseas where permitted.
FEMA rules can require realised foreign exchange that is not retained or reinvested under a permitted route to be repatriated within the applicable period.
The sponsor or platform should clearly explain:
- Where the income will be paid.
- Whether it will be paid in dollars or converted into rupees.
- Which U.S. tax documents will be issued.
- What records the investor will receive after a sale.
Common LRS Mistakes to Avoid
The first mistake is assuming that the US$250,000 limit applies only to investments. It includes all eligible LRS remittances made during the financial year.
The second mistake is using the LRS limits of family members without making them co-owners or co-partners.
The third mistake is remitting from one family member’s account while showing another person as the investor.
The fourth mistake is selecting a purpose code that does not match the actual transaction.
The fifth mistake is planning only for the investment amount and forgetting the additional TCS cash requirement.
The sixth mistake is failing to report the foreign asset and foreign income in the Indian tax return.
The seventh mistake is assuming that fractional real estate can be sold whenever the investor wants. Private property investments usually require a longer holding period, and an early exit may not be available.
How Raveum Supports Indian Investors
Raveum is designed to simplify the cross-border process for eligible Indian investors.
Investors can review individual U.S. real estate opportunities, the sponsor, property information, financial projections, fees, risks and offering documents through one platform.
Raveum also provides structured investment documents and supports FEMA-aligned and LRS-related remittance documentation. The authorised dealer bank still reviews and approves the transfer.
Fractional ownership allows investors to participate at a lower entry point than buying an entire U.S. property. Minimum investments vary by offering.
After the investment, U.S. sponsors and property managers handle the day-to-day operations, while investors receive ownership records, property updates and distribution information through the platform.
Raveum does not replace the bank, the investor’s CA or independent legal advice. It brings the property, ownership and remittance information together so the investor can complete the process with greater clarity.
Frequently Asked Questions
Can one Indian resident remit US$250,000 every year?
Yes. The LRS limit is US$250,000 per eligible resident individual for each financial year, subject to the rules in force and the person’s earlier remittances during that year.
Can a husband and wife remit US$500,000 together?
Yes, provided both are eligible resident individuals, both remit from their own accounts and both become co-owners or co-partners in the investment.
Can a family of four remit US$1 million?
Four eligible adult family members can together remit up to US$1 million if each has the full LRS limit available, each contributes from their own account and each becomes an owner or partner in the investment.
Can one person use the LRS limit of another family member?
Not for a capital investment held only in one person’s name. Family limits can be combined when the contributing members are genuine co-owners or co-partners.
Does TCS increase the cost of the investment?
TCS increases the cash required at the time of remittance, but it is not a permanent fee. It can be claimed as credit against the investor’s Indian tax liability.
Does an Indian investor need RBI approval for every remittance?
A remittance within the LRS limit normally does not require separate RBI approval when it is for a permitted transaction and is processed through an authorised dealer bank. The bank still reviews the transaction and documents.
Does an investor choose the LRS purpose code?
The investor provides the true purpose and supporting documents. The authorised dealer bank confirms the appropriate code based on the actual investment structure.
Must the foreign investment be reported in India?
Indian residents who are required to disclose foreign assets and foreign-source income must report them in the appropriate schedules of their income tax return.
Educational Disclaimer
This article is provided for general educational purposes and does not constitute legal, tax, banking, financial or investment advice.
LRS, FEMA, TCS and income tax rules can change. The correct treatment also depends on the ownership structure and the investor’s residential and tax status.
Investors should confirm the current process with their authorised dealer bank, chartered accountant and legal adviser before remitting funds.