How high are realtors’ and lawyers’ fees in Sri Lanka? What about other property purchase costs?
|Stamp Duty||3% - 4%||buyer|
|Costs paid by buyer||106% - 107%|
|Costs paid by seller||3%|
|ROUNDTRIP TRANSACTION COSTS||109% - 110%|
| See Footnotes
Source: Global Property Guide
Foreigners can freely buy properties as long as they are willing to pay the Land Tax for foreigners at 100% of the property value. An alternative is to lease the land for 99 years, bringing the tax down to 7%.
When buying property, it is important to hire a lawyer, who will prepare the contract. No sale is considered final without the legal transfer of ownership from seller to the buyer.
The legal owner of the property is the only one allowed to sell his property; in cases where a more than one person is considered the legal owners of the land each owner should agree to the sale. In most cases, an estate agency would ensure the ownership of the property even before the public offering. The deed of ownership must be checked by the lawyer in the Land Registry.
Both parties sign the transfer contract in the presence of the lawyer. The buyer also makes the full payment. Transfer is considered valid from the moment of signature by both parties. After which, the lawyer then registers the property in the buyer’s name.
All property transactions are done in cash, in rupee. Most locals do not accept cash cheques or money transfers.
In cases where you do not have enough money to purchase the property at once, most locals accept advance deposits for the property. It is expected that the deposit would amount to 10% - 20 % of the property’s value. Money to pay for the deposit can be secured by a lawyer, trustee or other middleman. The shorter the period between advance and final buy the better. It is advisable to be in Sri Lanka for the final buy. Being in Sri Lanka saves additional lawyer’s fees, who need to hold a power of attorney issued by the buyer to legally finalize the sale in cases where the buyer is not present.
Stamp Duty is LKR3,000 (US$29) for the first LKR100,00 (US$962) of the buying price, and LKR4,000 (US$38) for each additional LKR100,000 (US$962).
The round trip transaction costs include all costs of buying and then re-selling a property – lawyers’ fees, notaries’ fees, registration fees, taxes, agents’ fees, etc.
Sri Lanka uses Sri Lankan rupee. Exchange rate is at US$1=LKR103.998 as of 27th June 2006.
#1 PROPERTIES LANKA | July 12, 2010
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#2 JOSE MIGUEL VOTTERO | August 23, 2010
How about buying Hotels or Restaurants as a foreign company? Do we have to pay the taxes? Which are the policies for foreign investments.
#3 REBECCA | August 26, 2010
can i start a company in sri lanka and the company buy a house and i lease the house from my company would i get round the 100% tax that way
#4 PROPERTIES LANKA | September 01, 2010
#4 REBECCA=> Yes you can start company in Sri Lanka as well as buy or build house as your own sweet any beautiful location in Sri Lanka. If you would seriously buy property or invest in Sri Lanka, Properties Lanka team is ready to support you as well as we will support you to avoid 100% tax, when buying property in Sri Lanka by foreigners. Please contact your Sri Lankan number one real estate company as soon as posible.
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#5 HERMES | January 26, 2012
How does one avoid this 'please go away tax'? If it is like South-East Asia the property is put into the name of a local person, then a contract is drawn up between those parties. But is it enforceable?
#7 MICHAEL | February 18, 2013
I have lived in Sri Lanka for ten years. I am an Irish citizen and I have a Sri Lanka residence visa as my spouse is Sri Lankan. Our current property is owned in joint names. I do not recall paying a 100% land tax. We are in the process of buying a second property and our lawyer says that it will have to be in my wifeâ€™s name because she is a Sri Lankan citizen and I am not. Is this true? If my wife pre-deceases me what happens to the property?
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