With its unique beauty, Sri Lanka, an enthralling island country full of stunning beaches, green hill stations, and ancient ruins, draws Indian nationals. This attraction might also include the desire to own a piece of paradise—somewhere to relax among breathtaking scenery and a thriving culture. Fortunately, compared to many other island states, Sri Lanka provides a clearer route for foreign property ownership. This comprehensive guide takes a closer look at the procedure, walking Indian people through the rules, taxes, and stages.
Property types that foreign owners can own
In contrast to total land ownership, Sri Lanka permits foreign purchasers—including residents of India—to own some kinds of properties:
Condominiums and apartments
For overseas purchasers, this is the option that is easiest to reach. On any level of a structure, flats or condos are open for purchase. This provides an easy way to become a property owner in Sri Lanka, making it ideal for anyone looking for a second home or an investment opportunity.
Properties in designated areas that are freehold
Foreigners are allowed to purchase land in certain locations in Sri Lanka and build homes or villas there. More privacy and personalization are possible with this choice, but there are some important things to keep in mind. Normally, the government demands a substantial expenditure (about USD 370,000) before any land development, including the construction of a home or business space.
Recognizing the tax environment
International buyers of real estate in Sri Lanka must understand the tax ramifications. When it comes to property taxes, Indian people pay more than Sri Lankan nationals:
Stamp duty
There is usually a one-time stamp duty of 100% of the property value for freehold properties (except for those on Eden Island, which is a special development zone). When creating a budget for the purchase of a freehold home, this might be a big cost component that has to be carefully taken into account.
Taxes on condominiums
Depending on the construction and location, condominium taxes may be less than those of freehold homes. You may get assistance in understanding the relevant tax rates for your selected property from your real estate agent and attorney.
Getting finance for your purchase
For foreigners, getting a mortgage in Sri Lanka may be challenging. Foreign purchasers are usually not eligible for mortgages offered by Sri Lankan banks, in contrast to local purchases. Here’s how to make a financial plan:
Inward investment account (IIA)
You may have to utilize money from outside Sri Lanka and transfer it via an IIA at a nearby bank. You may transfer money for the acquisition of real estate and repatriate any sale earnings using this particular account.
Payment in advance
Depending on your arrangement with the seller, be ready to pay the whole purchase price upfront or a sizeable down payment.
Getting around the purchase process
These are:
Collaborating with an expert
Find a reliable land dealer with information on worldwide land transactions. They can assist you with exploring the intricacies of the market, track down homes that fit your necessities both in terms of location and cost range, and oversee communications with sellers.
Selecting the home of your dreams
As soon as a real estate agent is on board, begin looking at residences that fit your requirements and financial situation. Think about things like the island’s location, the kind of property, how close the desired facilities are, and any condo HOA dues.
The key is due diligence
Engage a property law specialist attorney in Sri Lanka from the outset. They will carry out in-depth legal investigations to determine the ownership status of the property, locate any limitations, and find any unpaid debts that could make the acquisition more difficult. To guarantee a seamless transaction and safeguard your money, this is an essential step.
Authority from the government (for freehold properties)
The Sri Lankan Ministry of Land Use and Habitat may need you to get a “Sanction to Purchase” if you want to pursue the acquisition of a freehold property. This procedure, which usually includes applying information about the property, yourself, and the source of cash for the acquisition, might be aided by your lawyer. A three-month processing period should be anticipated.
Purchase agreement and payment
A purchase agreement detailing the terms and circumstances of the transaction will be signed when talks with the seller are concluded and you are happy with the results of the legal due diligence. Make sure the money reaches the vendor as agreed upon by completing the payment via your created IIA.
Property transfer
Through the Sri Lankan Land Registry, your lawyer will make sure that the property title is transferred to your name in collaboration with the seller’s agent. This procedure formally verifies that you are the property’s owner.
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