If you are selling land or a building in Sri Lanka and you have looked this up before, the figure in your head is probably wrong. The rate moved this year.
Fifteen per cent, for resident individuals and partnerships
Tax on the gain from realising an investment asset, a category that includes land and buildings, is 15% for resident individuals and partnerships. It stood at 10% from 1 April 2018 under the Inland Revenue Act No. 24 of 2017. The Inland Revenue (Amendment) Act No. 11 of 2026 raised it, with effect from enactment in June 2026.
Summaries of the amendment give slightly different days within that month. KPMG reports one date; other professional summaries report another. We are not going to arbitrate between them here. The exact day matters to exactly one person, a seller whose disposal fell within days of the changeover, and that person needs a tax adviser reading their documents, not a paragraph on an agency’s website.
The position on one page
| What | Where it stands | Where that comes from |
|---|---|---|
| Rate, resident individuals and partnerships | 15% | Inland Revenue (Amendment) Act No. 11 of 2026 |
| Rate before the amendment | 10%, from 1 April 2018 | Inland Revenue Act No. 24 of 2017 |
| In force from | Enactment, June 2026 | the amending Act |
| Principal residence | Excluded, on a three-year ownership and two-year occupation test | IRD, checked 9 August 2026 |
| Small gains, resident individuals | Rs. 50,000 per gain, within a Rs. 600,000 annual total | IRD, checked 9 August 2026 |
| Payment and return | 30 days from the end of the month of realisation | IRD, checked 9 August 2026 |
The right-hand column is doing real work there, and the next section explains why.
The department’s own page still said 10%
This is worth stating plainly rather than burying. When the Inland Revenue Department’s capital gains page was checked on 9 August 2026, it set the rate for persons other than companies at 10%. The amendment had been enacted two months earlier.
An Act is what governs, not a web page. But a seller who does the sensible thing, goes to the official source and budgets from it, will have set aside two-thirds of what is owed. On a gain of ten million rupees, that is one and a half million due against one million provided for.
So: check the date on anything you read about this, including this page. We have given ours.
What is actually being taxed
The gain, not the price. In the department’s own formulation, the gain is the difference between the consideration received and the cost of the investment asset at the time of realisation.
That distinction is where sellers lose money unnecessarily. Cost is not simply the number on your old deed, and a seller who cannot evidence what an asset cost is a seller paying tax on somebody else’s arithmetic. Keep the documents.
Cost is a matter of evidence
Because the charge is measured against cost, the paperwork that proves cost is worth money in a fairly literal sense. The deed you bought on, the receipts for work that changed the property, the bank records behind the payments, these are the documents a computation is built from.
What counts as cost is defined by the legislation rather than by common sense, and the boundary is not always where an owner assumes it is. That question belongs to a tax adviser reading the Act against your file. The part that is squarely yours is keeping the file at all, which is a great deal easier to do before a sale than during one.
Property held before 30 September 2017
There is a rebasing rule and it matters enormously to anyone who has owned property for a long time.
Where an asset was held before 30 September 2017, the Inland Revenue Department treats its cost as the market value on that date. A house bought in 1994 is therefore not taxed on three decades of growth. The measuring point is what it was worth in September 2017, and only the movement since then is in scope.
Establishing that value is a valuation exercise, and a chartered valuation is a formal document produced by a qualified valuer. A market appraisal from an agency is a different instrument and is not a substitute for one. Where the 2017 value is load-bearing for a tax computation, it needs the qualified version.
The home you live in
A principal residence is excluded, subject to two conditions that are tested together. You must have owned it continuously for the three years before the disposal, and lived in it for at least two of those three years, counted on a daily basis.
Daily counting is the part people wave away. A year spent working abroad, a spell when the house was let, a period living with family during a renovation, each of those is a fact about the calendar, and the exclusion turns on the calendar rather than on the intention. Check the dates against the documents before assuming the exclusion applies.
The small-gains threshold
For resident individuals, a gain not exceeding Rs. 50,000 is excluded, provided total gains in the year of assessment do not exceed Rs. 600,000. Both limbs have to hold. It is genuine relief at the small end and it will not reach a property sale of any size.
Thirty days, not next April
The clock runs 30 days from the end of the month in which realisation occurred, and it governs the return as well as the payment.
That is a short clock, and it is the practical trap in this entire subject. A seller who mentally files tax alongside the annual return will miss it. Work out the liability during the transaction, not after it, and have the number ready before the money is spent on the next purchase.
The pressure the rate is arriving under
Gains are larger than they were, which is what makes a five-point increase more than a technicality. Look at the Central Bank of Sri Lanka’s new condominium price index: in 2026 Q1 the Colombo District series stood 18.5% above where it was twelve months earlier. That measures condominium prices in a single district rather than every property in the country. It is still a clear signal that nominal gains on disposal are being computed off higher numbers than they were a year ago, and a bigger gain meeting a steeper rate compounds in one direction only.
Where this stops being an article
We have set out the position and cited the Act. What we have not done, and cannot do, is apply it to your property.
Whether a particular disposal is a realisation, what your cost base actually is, whether the residence exclusion survives a gap in occupation, and how a disposal near the June changeover is treated, those are questions for an attorney-at-law or a qualified tax adviser working from your deeds and your dates. A1 is a property agency, not a tax practice, and the distinction is the reason this page cites the legislation instead of interpreting it.
What we can do is give you an evidence-based view of what a sale would realise, drawn from comparable sales and the stock currently competing with yours, so the tax question gets asked against a real number instead of a hope. If you are weighing a sale in any of our seven districts, start with a conversation, then take the tax question to somebody qualified to answer it.