Sri Lanka: Guide to Buying Costs and Procedures
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Sri Lanka impose 100% land lax when foreigners buy
How high are realtors’ and lawyers’ fees in Sri Lanka? What about other property purchase costs?
Transaction Costs |
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| Who Pays? | ||
| Land Tax | 100% | buyer |
| Stamp Duty | 3% - 4% | buyer |
| Lawyer’s Fees | 3% | buyer |
| Realtor’s Fee | 3% | seller |
| Costs paid by buyer | 106% - 107% | |
| Costs paid by seller | 3% | |
| ROUNDTRIP TRANSACTION COSTS | 109% - 110% | |
| See Footnotes Source: Global Property Guide |
||
How difficult is the property purchase process in Sri Lanka?
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).
Footnotes to Transaction Costs Table
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.
Currency:
Sri Lanka uses Sri Lankan rupee. Exchange rate is at US$1=LKR103.998 as of 27th June 2006.
Sri Lanka - more data and information
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posted by pat donegan | 2007-03-15
hotelier, bentota sri lanka
what if i buy land in my company name do i still have to pat 100% land tax