How to buy a property in Sri Lanka as a foreigner
Foreigners are allowed to buy apartments, condominiums and freehold land, however, there is a 100% Land Tax for foreigners imposed on the property value, this will double the cost of the land for foreigners. Instead, foreigners can lease the land up to 99 years which is only taxed at 7%. When considering to buy a property in Sri Lanka it is important to get legal representation from a lawyer and prepare your purchase contract, who will also confirm the legal transfer of the property from the seller to the buyer.
It is paramount important to check the deed of ownership of the property and confirm the legal owner of the property. A lawyer will also confirm that all interested parties of the property have authorised the sale and signed the transfer contract. Once your layer confirms the legal documents you can transfer the funds directly or via the layer. A lawyer will charge around 2-3% for preparing legal documents and could charge more for managing the fund transfer.
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Foreigners will not be able to obtain a mortgage or loan to purchase the property, all the money has to come from outside the country, and in some instances, you must be able to provide a source of funding to the authorities (Central Bank) to clear funds from the bank.
If a foreign resident wants to purchase a property, then the money will need to be channelled into the country via an Inward Investment Account (IIA), held at a local bank. IIA is a special account designated for eligible investors resident in or outside Sri Lanka to route funds to invest in the permitted investments. All your investments and returns from your property sales can be done through the same account.
At Global Exchange, we have a very good relationship with local Sri Lankan banks and we do one-day fund transfer to local banks. If you have any large money transfer requirements to Sri Lanka, please give us a call and discuss with one of our representatives and we will be able to help you with your fund's transfer.