Imputed Rental Income Tax on Residential Properties

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Sri Lanka plans to introduce a new Tax on 2025 targeting owner-occupied and vacant residential properties starting from April 2025. This new Tax will replace the previously proposed Tax for 2025. IMF supports this new tax initiative as part of country’s revenue generation efforts.

Imputed rental income tax calculates the revenue a property owner can earn if he or she rents out the property and taxes them on that potential income. This tax is derived on the possible income from the property rather than its value.

The IMF has time and again expressed that Sri Lanka must focus on setting-up a data vault at the municipal level to enact this tax system.

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