Quick Guide For Capital Investment Abroad – LRS, TCS, UAE Mortgages & Ownerships

Thinking of adding a Dubai penthouse or Abu Dhabi villa to your portfolio? Here’s a crisp, investor-friendly breakdown of the cross-border rules and mortgage basics you need to know – plus a short comparison with India’s markets. Designed for high-net-worth investors and luxury clients who want clarity in capital investment. 

1. LRS – The Gateway For Investment From India

   
   

The Liberalised Remittance Scheme (LRS) is the mechanism Indian residents use to move money abroad for permitted purposes – investments, gifting, education, travel, property purchases (subject to some restrictions) – and it’s the single most important limit to check before planning any overseas purchase. The current cap is USD 250,000 per person per financial year (April–March). That ceiling is cumulative across all remittances under LRS, so plan your transfers and entities carefully.  Reserve Bank of India

Investor takeaway: For luxury deals in case of Dubai Real Estate market above the LRS ceiling, structures (e.g., foreign company SPVs, joint ventures) and staged payments become essential – but those add complexity, reporting and often tax considerations.

2. TCS On Foreign Remittances – The Extra Immediate Cash Flow Hit

India now requires banks/authorized dealers to collect Tax Collected at Source (TCS) on certain outward remittances – especially those for education, travel and other foreign remittances once annual thresholds are exceeded. Rules and rates have evolved; for education and medical remittances the effective TCS is lower (and sometimes nil for loan-funded education), while other remittances can attract higher rates once you cross specified thresholds. TCS is collectible at the time of transfer but can be adjusted against your final tax liability or claimed as a refund if excess.

Investor takeaway: TCS increases your upfront cost of sending money abroad. For large luxury purchases, model TCS into cashflow – you’ll get it back later via assessment/filing, but it reduces usable liquidity at transaction time in capital investment.

3. UAE Mortgages – Accessing Leverage for Offshore Property

Non-residents (foreign nationals living abroad) can take mortgages in the UAE. But terms are stricter compared with resident buyers. For non-residents, banks often require a down payment of ~25-35 % for a first property (depending on value). Some sources say 40 %+ for investment properties. 

The loan-to-value (LTV) cap is lower for non-residents. For example, up to ~60-65 % or less in many cases. In case of property, it must be in approved / “freehold” zones and from reputable developers. Due diligence is key. 

Comparison with Indian markets: In India, mortgage access is mature for residents: high loan‐to‐value (70-90 % in many cases), long tenure, etc. For NRIs (Indian non-resident nationals) wanting to borrow from Indian banks for overseas property, there are regulatory hurdles (under FEMA) that often make it infeasible.

In contrast, for Dubai investment, UAE offers a relatively clean path for non-resident foreigners to borrow – albeit conservative terms. For a luxury investor this means you can leverage your capital rather than deploying 100 % equity.

4. Bringing It All Together – Luxury Investment Insights

Let’s summarise how all these pieces interplay when you’re a luxury-asset investor looking at the India-to-UAE corridor.

Capital Flow Planning (LRS + TCS)

If you’re moving funds from India to invest abroad (say UAE property), you need to fit within your LRS limit (USD 250k per person/year). One might need to structure financing across years or across family members for larger deals.

Leverage via UAE Mortgages

Instead of deploying full equity, consider using UAE mortgage options to enhance returns, especially given favourable ownership and tax environment in UAE. But expect higher down payments and stricter criteria compared to domestic mortgages in India.

Ownership Structure Strategy

Choose the right zone (freehold vs leasehold) in the UAE and understand the legal vehicle (individual vs corporate) you are buying via. Freehold in a prime area gives long-term control and better resale prospects. Compare with Indian ownership costs, taxes and regulatory friction.

Tax & Compliance Awareness

Even though UAE may have no or low property income tax, if you are an Indian resident you still must declare foreign assets and global income (e.g., rental from UAE property) in India. Meanwhile, Indian properties carry heavier tax and compliance burdens (stamp duty, capital gains tax, TDS on rent etc) which can erode returns.

Yield & Appreciation Potential

In markets like Dubai investment you can target higher rental yields (7-10 % or more) and lower tax drag, compared to many Indian metro residential assets (2-5 % yield typical). 

Conclusion

Luxury real-estate investment across the India – UAE axis offers a blend of strategy: you have India’s remittance framework (LRS, TCS) to handle outbound flows, the UAE’s investor-friendly mortgage and ownership regime, and the potential for higher yield / cleaner equity growth. For the luxury investor in the Dubai real estate market, this is not simply about buying a second home – it’s about global portfolio diversification, structural allocation and premium yield pickup.

That said – structure always matters in capital investment. From which zone in UAE you buy (freehold vs leasehold), how you finance (mortgage terms for non-residents), how you remit funds (via LRS, compliant with TCS), to how you exit (capital gains, tax in India) – each aspect feeds into net return and risk. 

Sawaicap Ventures Private Limited operates its private credit business under the SÀWAI CAPITAL platform, a boutique alternative investment and asset management firm specialising in structured credit solutions. The firm brings institutional-grade capabilities to India’s growing private credit market. Connect with us to explore unique capital investment opportunities globally. 

Frequently Asked Questions (FAQ’s)

1. What is LRS and how does it impact investing abroad?

The Liberalised Remittance Scheme (LRS) allows Indian residents to remit up to USD 250,000 per financial year for approved purposes like overseas property purchase. It acts as a regulatory gateway for cross-border investment.

2. Can I use multiple family members’ LRS limits for large investments?

Yes, for capital investment many investors structure payments across spouse and adult children to legally access higher total remittance capacity for luxury property purchases.

3. Do I need to report UAE property income in India?

Yes. Indian residents must report global income, including rental yields from UAE property, under Indian tax laws.