Buying real estate in Sri Lanka from foreigners (2023)

FAQs

Can you buy property in Sri Lanka as a foreigner? ›

What are the rules and regulations for expats and foreigners buying and renting property in Sri Lanka ? Foreigners can buy apartments / condominiums from ground level up, however lands cannot be purchased on freehold and can only be leased up to 99 years.

According to the recently released House Price Index of LankaPropertyWeb that is based on asking prices for Q1 of 2022, the overall selling prices of apartments have soared by 36.08% from Q1 of 2021 while the overall residential land prices of Sri Lanka have reduced by 29.77%.

As of 2022, the Capital Gains Tax rate in Sri Lanka is 10%.

Sri Lanka law currently restricts foreigners' freehold purchases of land and non-apartment property through Sri Lanka incorporated companies, which have at least 51% of shareholders who are Sri Lankan citizens (or dual citizens).

Foreigners cannot obtain a loan or a mortgage to purchase a property or invest in Sri Lanka. All the money has to come from outside Sri Lanka, and, in some instances, the Central Bank might require you to provide a source of the funding before clearing your funds from the bank.

Resident individuals are subject to income tax on their worldwide income. Non-resident individuals are taxed only on their Sri Lanka-sourced income.

Along with the lack of country-wide wi-fi, there is a general lack of infrastructure. This isn't a big deal if you're just visiting, but could be extremely annoying if you plan on living in Sri Lanka long term. Power outages are common. Other than the Colombo-Galle Highway, roads are in poor condition.

A family of four estimated monthly costs are 1,595.5$ (491,481.3Rs) without rent. A single person estimated monthly costs are 448.2$ (138,054.5Rs) without rent. Cost of living in Sri Lanka is, on average, 54.5% lower than in United States. Rent in Sri Lanka is, on average, 86.0% lower than in United States.

“The standard of living in Sri Lanka is very good. Citizens have an admirable civic sense, it is a very safe country,” says Umesh Gautam, CEO, Lanka Ashok Leyland, one of the oldest Indian investments in Sri Lanka. “Our main objective is to grow with Sri Lanka, we will continue to be here no matter what.

The average cost per square foot to build a Basic house is between Rs. 12,000/= to Rs. 14,000/= as of August 2022, while it'll cost around Rs. 20,000 per square foot upwards for a house with luxury fittings and mod-cons.

How much is capital gains tax on property in Sri Lanka? ›

When an individual sells investment assets in Sri Lanka, a capital gains tax of 10% is applicable on the difference between the selling price and the cost.

Pay the stamp duty charges and register the deed in the relevant land registry in Sri Lanka. After your deed has been registered, make sure to get a copy of the original certificate. If you have purchased the said land using a bank loan, you will have to hand over the deed to the bank as a security for your loan.

The cost of living in Sri Lanka is relatively low, so many expats enjoy a comfortable and luxurious lifestyle here. However, it is not so easy to immigrate to the country for permanent residence. Foreigners are attracted by the fact that there are very affordable prices for buying real estate.

Land Reform Laws (1972 and 1975) – places a land ceiling on private ownership (50 acres or 25 acres for paddy), and nationalised land estates. This has allowed government access to 1 million hectares of land, although due to mismanagement less than 10% has been redistributed to landless persons [12].

Immigration Services Centre. 'My Dream Home' programme is promoted by the Government of Sri Lanka to allow people from all over the world, who fulfill a certain criteria to retire in Sri Lanka. It allows the retiree to live in the country under a long term resident visa, issued in two year blocks.

Conditions of the Sri Lanka ETA for US citizens

US nationals with the Tourist ETA can enter Sri Lanka twice, whereas Americans traveling on business are allowed multiple entries. Both permits allow for a maximum stay of a month (30 days) for each visit.

The agreement with Sri Lanka represents the first tax treaty between the two countries. The tax treaty with the US was first signed in 1985 in Colombo.

The main economic sectors of the country are tourism, tea export, apparel, textile, rice production and other agricultural products.

As per the provisions of the Inland Revenue (Amendment) Act, No. 45 of 2022, the personal tax relief for a resident individual and citizen of Sri Lanka is set at Rs. 1,200,000, effective from 1st April 2023.

What is the main tax in Sri Lanka? ›

Indirect taxes in the forms of excise duties, VAT and tariffs are the key contributors to the government tax revenue with 74% while direct taxes including income tax, Pay-as-you-earn tax and Economic Service Charge contribute only around 9%.

Whatever their situation in society, the people of Sri Lanka possess a warm and friendly nature reflected in persistent smiling faces and eagerness to help those unfamiliar with aspects of local life.

Sri Lanka is well known for its rich Buddhist culture as well as other religions. Being a religious country, Sri Lanka has many places with religious and historic significance, which attract tourists from all over the world.

Typical monthly expenses ranging from rent, utilities to food and transportation. $432 a month or 5000 $184 a year. Assuming an average annual inflation rate of 3%. or return on balance of 8%. and an average life expectancy 25 years after, in order to retire in Sri Lanka, you need at least $77,700 and to not run out.

Sri Lanka achieved 'Upper Middle Income Country' (UMIC) status in July 2019, as the country's Gross National Income (GNI) increased from USD 3,840 per capita in 2018 to USD 4,060 per capita in 2019. World Bank's (WB) new threshold for UMICs is USD 3,996 – USD 12,375 GNI per capita.

Colombo (Sri Lanka) has been ranked amongst the 10 cheapest cities in the world in this year's Worldwide Cost of Living survey (WCOL), run by the Economist Intelligence Unit (EIU).

China is the largest investor in Sri Lanka today, with funding and investment of nearly $15 billion.

Among investors in Sri Lanka, fixed deposits (FD) and real estate investments have been the best and most popular investment options...

NRRAs may be opened and maintained in the form of Savings or Current (without overdrawing facility) or Term Deposit account, in Sri Lanka rupees. b. NRRAs shall be held as a sole account and NRRAs maintained by emigrants may be held as joint accounts with another emigrant.

What is a typical house in Sri Lanka? ›

Homes in Sri Lanka

A traditional house in Sri Lanka has one or two rooms and its own garden and is separated from other houses. Traditional houses have mud and plaster walls and a thatched roof made of woven palm fronds. Nice homes have glass windows, stucco and/or brick walls and ceramic tile roof.

By these rankings, Turkey is the most affordable country for home shoppers, with an average cost of $69 per square foot. No. 2 for affordability is Mexico, where the average dwelling comes in at $90.10 a square foot (by the rough math, that could get you a 1,000-square-foot dwelling for around $90,000).

Sri Lanka to start property tax, transfer, gift, inheritance tax from Jan 2025. ECONOMYNEXT – Sri Lanka will start a nation-wide property tax and a gift and inheritance tax with minimal exemptions, according to a deal reached with the International Monetary Fund and the government.

15% Value Added Tax (VAT) on Residential Condominium Developments.

For 2023, you may qualify for the 0% long-term capital gains rate with taxable income of $44,625 or less for single filers and $89,250 or less for married couples filing jointly.

Foreigners can freely buy properties subject to the payment of the Land Tax applicable for foreigners at 100% of the property value. An alternative is to lease the land for 99 years, bringing the tax down to 7%. If you consider buying (any) property in Sri Lanka it is advisable to consult with a specialized lawyer.

An intended traveller visiting Sri Lanka for a short stay for following purposes, must obtain ETA prior approval for their arrival. At the arrival applicant may be granted 30 days ETA with double entry facility and double entries can be made from the date of initial arrival (Within given 30 days).

Any non-nationals of Sri Lanka will need a visa to enter the country. The type of visa required is subject to your proposed length of stay and the purpose of your visit.

Where do expats live in Sri Lanka? ›

There are many expats living in Sri Lanka, and most of them are based in Colombo. But what attracts expats to Colombo? In this Ask an Expat series I interview people living all over the world but outside of their home country.

The 2022 Land Report 100, compiled each year by The Land Report magazine, released its annual list of landowners who own the most acres in the United States. The nation's largest private landowners are the Emmerson family in California who own over 2.4 million acres.

No law prohibits foreigners from inheriting property in Sri Lanka. However the Finance Act No. 11 of 1963 states that where of ownership of any land is transferred to a person who is not a citizen of Sri Lanka, a tax of an amount equivalent to the value of the land is charged.

1. EMMERSON FAMILY. The nation's largest private landowners, California's Emmerson family, are a prime example of this trend. Through their Sierra Pacific Industries, the Emmersons increased their landholdings by more than 100 square miles to over 2.4 million acres.

Different countries have different rules, but the easiest countries to get dual citizenship are states like Turkey, Vanuatu, Grenada, and Dominica.

The Bottom Line

Dual citizens can travel freely in both countries, as well as work, do business, own land, and do other activities that may be restricted to foreigners; however, there are also disadvantages, as dual citizens may face extra taxes or even military service.

How many citizenships can you have? If a country allows its citizens to hold passports of other countries, then they can obtain as many as they want. You can have dual citizenship, triple citizenship or more. There are no international limitations for that.

Foreign nationals visiting Sri Lanka for a period of more than 30 days on tourist purposes will be granted the visa for maximum 90 days with a double entry.

Pakistan tops the list of the cheapest countries in the world, with a cost of living index of $294. Sri Lanka and Nepal come in second and third on the list, with cost of living indexes of $316 and $385 respectively.

RETIREMENT OPTIONS SRI LANKA:

Depending on your retirement plan you can either apply for a 3 month tourist visa at the Sri Lankan Embassy in your home country or go straight for the 12 month retirement visa. A Tourist Visa is suitable for people who want to send only few months in the sun over the winter.

Can an American retire to Sri Lanka? ›

The Dream Home Visa Program is a retirement program that permits foreigners to retiree and reside in Sri Lanka.

Do US citizens need a visa for Sri Lanka? Yes, you do. Cost of the visa: The ETA for the Tourist Visa costs 35 USD, the Business Visa is 40 USD, and the Transit Visa is free of charge but only valid for 2 days. Sri Lanka visa processing time: 3-5 business days.

Currency Regulations

Visitors to Sri Lanka bringing in excess of US$ 10,000 should declare the amount to the Customs. All unspent monies, which were converted from foreign currencies declared on arrival, can be re-converted to original currency. You are required to produce encashment receipts or payment bills.

Sri Lanka currently charges a 500 dollar fine on foreigners who overstay visas for more than 2 days. The Minister of Public Security has recommended that the no penalty be charged at an airport or port if a foreigner leaves within 7 days of a visa expiring.

$432 a month or 5000 $184 a year. Assuming an average annual inflation rate of 3%. or return on balance of 8%. and an average life expectancy 25 years after, in order to retire in Sri Lanka, you need at least $77,700 and to not run out.

There are many expats living in Sri Lanka, and most of them are based in Colombo.

Government of Sri Lanka allows foreign national to arrange marriage ceremony and registration in Sri Lanka. In this regard please ensure that applicant should have the documents listed below. The legal requirements for Registration of Marriages of Foreign Nationals in Sri Lanka are very straightforward.