Sri Lanka has a 100% property tax for foreign buyers. Though there are ways to evade these enormous fees. Other fees you (or the seller) have to pay when buying property are:
- 3% - 4% stamp duty
- 1% - 3% lawyer’s/ notary’s fee
- 3% - 5% realtor’s fee (often paid by the seller, sometimes even by both parties)
There are legal ways to avoid the 100% property tax. The ones listed above have to be paid anyway. Most of the solutions include spending or investing a lot of money. Those possibilities are:
- Construction of more than 100 housing units
- Investing US$10 million or more for a hospital or hotel
- Buying an apartment on the 4th floor or above of a condominium project
- Investing large sums of money in a project of the Board of Investment (BOI)
Further possibilities may be cheaper and more affordable for private buyers. If you are leasing the property for a maximum of 99 years, instead of buying, the tax reduces to 7%. For that you need a Sri Lankan citizen who is the actual owner of the property. He has to agree when you sell the property again. Besides this he has no other claims.
Finally there is the possibility to found a company that you own 100%. Then the property can be bought through the company which is the official owner of it. You should inform yourself first about the legal restrictions to founding a company as a foreigner in Sri Lanka.