Guide to buying property in Sri Lanka for foreigners and expats - 2023

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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. A condominium is defined as a group of residences with shared facilities. The condominiums can be purchased provided that, the entire value shall be paid upfront through an inward foreign remittance prior to the execution of the relevant deed of transfer.

Any private company with minority foreign ownership can buy or lease property in Sri Lanka.

Under the current law, a foreigner can get in to the property market using the following options:

a)   By leasing the property
b)   By inheriting
c)   By a gift from parents
d)   Part of a private company with a local shareholding of 50% or above
e)   Buy an apartment / condominium (any floor)
f)   By obtaining Dual Citizenship


Buying land

Foreigners cannot buy land as sale of land to foreigners has been prohibited from the 2013 budget. Land can only be leased out for a max of 99 years. Foreigners or companies (with more than 50% foreign ownership) no longer need to pay the 15% land tax from 1st Jan 2016 (LAND (RESTRICTIONS ON ALIENATION) (AMENDMENT) - issued 2nd Sept 2016)

VAT on apartment sales

The VAT tax on apartment sales has been abolished, effective 1st Dec 2019. A 15% VAT tax was affective from 1st April 2019 to 31st Oct 2019 and a 6% rate from 1st Nov 2019 to 30th Nov 2019. Buyers no longer need to pay VAT tax on the purchase of an apartment / condominium.

Taxes for Property

There is a 1% Stamp Duty for leasing land up to 99 years.

If buying a property, there will be a 3% Stamp Duty on first LKR 100,000 and 4% thereafter. A lawyer will typically charge 2-3% for preparing the documents.

Taxes for landlords

Anyone leasing out a property to a foreigner or local will need to pay a 1% stamp duty when the rent is collected.
VAT is payable at 8% if the lease is to a VAT Registered person, other than on residential premises. Further, the sale of land & buildings other than residential premises will also be liable to VAT at 8% on the value.

Capital Gains Tax (CGT)

The Capital Gains Tax of 10% on the gains (profits), will become effective from 1st April 2018. It will be a flat 10% rate irrespective of the period of ownership. The tax will be applicable to both foreigners and locals. For any assets owned/bought prior to April 1st 2018, then the value of that asset will be calculated as at 30th September 2017. Any gains of less than Rs. 50,000 will not be subjected to CGT and if the property being sold has been your principle place of residence for 2 of the last 3 years, then CGT will not be applicable. If you renounce residency in your country and become a resident in Sri Lanka, then CGT will need to be paid on the investment property in your former country. You can find out more on Capital Gains Tax from here.

Residency Visas

A residency visa cannot be obtained by simply buying a property. However, Foreigners who invest over USD 250,000 will be allowed residence visa in Sri Lanka under the Resident Guest Scheme Visa programme. A 5-years visa can be obtained by investing USD 300,000 or above and a 10-year visa for any investments over USD 500,000. Anyone over 55 years old can obtain a 2-year renewable visa under the My Dream Home Visa Programme by depositing only USD 15,000.

Can foreigners obtain a mortgage/loan?

Foreigners cannot still obtain a mortgage from local banks, however dual citizens and non-resident Sri Lankans are able to. Please Contact us if you would like to get any assistance with applying for a mortgage.

Moving money in and out of the country

If a foreign resident wants to purchase a property, then the money will need to be channeled in to the country via a special SIA (Securities Investment Account) - which are now called Inward Investment Accounts (IIAs), held at a local bank. Once the property has been sold, the money can be taken out (plus any gains) via the same account in the currency that the money was deposited in. If you currently own a property where the money hasn't been brought via a SIA account (eg. inherited, bought while a citizen of Sri Lanka), then there's an annual limit of $20,000 when taking the money out of the country. You could still take the money out at once, if the source of the money can be proven to the bank and Central Bank (this whole process will take a few months to complete).

The government will allow $45,000 to be brought in to the country without declaring the source (Budget 2017)

The budgets of 2017 & 2018 have proposed that foreigners be allowed to borrow money from local banks for the purchase of condominiums (up to 40%).


If you would like more details or assistance with your requirements, please visit our Buyer and Seller Assistance page



Update 30/11/2019 - Gazette notification 2151/52 - removal of VAT taxes on apartments from 1st Dec 2019

Update 31/10/2019 - Gazette 2147/59 - Reduction of VAT rate from 15% to 6%

Update 16/08/2018 - Amendment to the Value Added Tax Act, No.14 of 2002, (Amendment Act No. 25 of 2018) - removal of VAT exemption from apartments from 1st April 2019

Update 22/05/2018 - Amendment to the Land (Restrictions on Alienation) Act, No. 38 of 2014 - remove restrictions from ground-level up for foreigners (Bill no. 250) and the 49% foreign shareholding restriction for listed companies

Update 09/12/2017 - 3rd reading of the 2018 Budget (Committee Stage) passed in Parliament

Update 09/11/2017 - Budget 2018 proposes the implementation of the proposals from the 2017 Budget

Update 07/09/2017 - Inland Revenue Bill Passed

Update 10/11/2016 - Budget 2017 proposes Capital Gains Tax, removing restrictions of foreigners buying property (freehold right restrictions) and ability for foreigners to get loans/mortgages from domestic banks for property purchases.

Update 02/09/2016 - The 15% tax on land lease for foreigners was removed from 1st Jan 2016 via the LAND (RESTRICTIONS ON ALIENATION) (AMENDMENT) gazette

Update 31/10/2014 - Land (Restrictions and Alienation) Act published. Read it from here

Update 03/08/2014 - New legislation is being drafted to strictly enforce rules pertaining to the 2013 ban on foreigners owning land. There will be a tax of 15 per cent on the value of the lease. With new laws you are also not allowed to circumvent this ban by purchasing the land through a majority Sri Lankan nominee owned company. It's assumed that this law will not apply to foreign-owned companies of more than 10 years (TBC). More>>

Update 03/11/13 - the Investment Promotion Ministry is to submit a cabinet paper to reduce the land transfer tax to below 10 per cent to facilitate foreigners seeking to lease land.

Update 17/02/13 - Sri Lankan expats holding foreign citizenship can now buy land in Sri Lanka. More>

Last update: Aug 2018

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