Investing in Sri Lanka: Yields, Appreciation & Ownership
Who can buy, how ownership works, and the taxes and duties for buying property in Sri Lanka.
Who can buy in Sri Lanka
Under the Land (Restrictions on Alienation) Act No. 38 of 2014, foreigners cannot directly purchase freehold land. Alternatives include 99-year leases (15% lease tax abolished in 2016) or establishing a Sri Lankan company where a local trustee holds at least 51%.
| Buyer | Permitted | Tenure | Conditions |
|---|---|---|---|
| Sri Lankan Citizen | Yes | Freehold | UnrestrictedApproval: Land Registry |
| Foreign National (lease) | Yes | Leasehold | Up to 99 years lease; no lease tax since 2016Approval: Land Registry |
| Foreign National (via company) | Conditional | Freehold (via company) | Sri Lankan company with 51%+ local shareholdingApproval: Company registration + Land Registry |
Capital gains on a sale
Capital Gains Tax (CGT) in Sri Lanka is levied on the profit from the sale of investment assets, including land and buildings.
| Holding period | Classification | Tax rate | Indexation |
|---|---|---|---|
| Any | Investment Asset (Land/Building) | 10% on gain | Not applicable; cost as of 30.09.2017 or actual acquisition cost if later. |
Always consult a licensed real estate attorney before purchase. Rules change; verify current law. Always confirm with a qualified tax professional. Rules change; verify with a professional before you transact.
Sri Lankan Property Taxes and Transfer Costs for Foreigners
Sri Lanka's once-notorious 100 percent foreign-buyer surcharge was repealed in 2013, replaced by a 2014 general restriction on land transfers to foreigners plus a much smaller 1.15 percent annual land tax on qualifying foreign holders. Confirm which current rule actually applies to a specific structure rather than relying on either outdated or overly optimistic assumptions.
Frequently asked questions about Sri Lanka
Yes. Up to 99 years lease; no lease tax since 2016
Buying or selling in Sri Lanka?
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