Guide to Buying Property in Sri Lanka for Foreigners & Expats (2026)

Foreigners and expats can invest in real estate in Sri Lanka under specific regulations. This guide explains all available pathways, legal requirements, tax structures, visa eligibility, and investment rules for property acquisition and leasing.

1. Can Foreigners Buy Property in Sri Lanka?

Foreigners can legally purchase:

• Apartments / Condominiums (any floor above ground level)

• Property via a private company with 51%+ local ownership

• Real estate as dual citizens

• Shares of Sri Lankan public real estate companies

Foreigners CANNOT purchase land outright.
Land is only available on long-term lease up to 99 years.

To buy a condominium, full payment must be made upfront via inward foreign remittance before the transfer deed is executed.

2. Legal Entry Options for Foreign Buyers

Foreigners can enter the property market in the following ways:

a) Leasing property
b) Inheriting property
c) Receiving property as a gift from parents
d) Through a private company (local ownership >50%)
e) Via a locally listed public company
f) Buying apartments/condominiums
g) Obtaining Dual Citizenship

3. Establishing a Private Limited Company to Purchase Real Estate

Foreign investors may form a Private Limited Company to legally acquire property in Sri Lanka.

Steps:

1. Obtain required permits, approvals, business visa

2. Choose business structure → Private Limited recommended

3. Register the company with the Department of Registrar of Companies

4. Open a Sri Lankan bank account under company name

5. Confirm land eligibility and obtain necessary permits

6. Complete purchase once approvals are granted

This process can be technical — legal or corporate advisory assistance is strongly recommended.

4. Buying Land in Sri Lanka

• Land purchase by foreigners is prohibited (2013 onwards).

• Land can only be acquired on 99-year lease.

• 15% lease tax was removed from 1st Jan 2016 (Alienation Act Amendment).

5. VAT & Taxation on Property Purchases

Apartment Purchases

• VAT: 18% (2024 onward) — payable for primary market purchases

• SSCL: 2.5%

Stamp Duty

6. Taxes for Property Owners / Landlords

• 1% stamp duty applies when rent is collected

• VAT applies for leases to VAT-registered parties (except residential)

• VAT also applies to sale of non-residential property

7. Capital Gains Tax (CGT)

• 10% flat CGT applied from 1st April 2018

• Exempt where gain < LKR 50,000

• Exempt if owner occupied property for 2 out of last 3 years

• Assets owned before April 2018 valued at 30 Sept 2017

If a foreigner becomes a tax-resident in Sri Lanka, CGT applies to overseas investments as well.

8. Residency Visas Through Real Estate Investment

Funds must be deposited into an IIA – Inward Investment Account before applying.

9. Mortgage & Financing

• Foreigners cannot obtain mortgages from Sri Lankan banks

• Dual citizens and NR Sri Lankans are eligible to apply

10. Moving Money In & Out of Sri Lanka

• Property must be purchased through IIA (formerly SIA)

• Sale proceeds + gains can be repatriated through the same account

• USD 20,000 per year withdrawal limit if original purchase not made via IIA

• USD 45,000 may enter Sri Lanka without source declaration (Budget 2017)

Budget 2017–18 also proposed allowing foreigners to borrow up to 40% for condominiums.

Final Clarification: Can a Foreigner Buy Land in Sri Lanka?

Under the Land (Restrictions on Alienation) Act:

❌ Freehold land cannot be transferred to:

1. Non-citizens

2. Companies with ≥50% foreign ownership

3. Foreign companies

✔ However: From April 2018, public companies with majority foreign ownership may buy immovable property.