Properties for Sale in Nicaragua

Tax and Offshore Investment in Nicaragua

Tax regimes vary greatly throughout Latin America. While some countries are investor friendly, others are not so open. There are several benefits (i.e. retirement programmes, tax discounts) but also some tax obligations. In this section we provide an analysis of the different tax structure in each country where January First Real Estate lists properties. This information may be very important for you to choose you retirement destination or where to invest. Keep in mind that there are related visa and residence issues which are discussed in Visa/Residence Requirements. In case you need more information or have doubts on any of these issues, the specialised staff in January First Real Estate will be glad to answer all your questions, click here.

Real estate assets are, without doubts, one of the most secure and profitable ways of investment. There are two main reasons for this:

1. Properties always tend to increase their value in the long term.
2. They generate an income for their exploitation (rental/yields).

Taxes and Costs in Nicaragua

Income Tax (Impuestro Sobre la Renta)
Income earned by non-resident individuals on Nicaraguan-sourced income is taxed at progressive rates. The taxable income is 70% of the gross income which is deemed to be the net income. For rental income, 70% of the gross rent is taxable (consequently, only 30% of the gross rent can be deducted).
Nicaragua’s tax law is based on the territorial concept. Income tax is levied on Nicaraguan-sourced income only. It is chargeable on a progressive scale with a maximum of 30%, thus:

Income tax
Taxable Income NIO (US$) / Marginal Tax Rate
Up to 50,000 (US$2,795) / nil
50,001 – 100,000 (US$5,597) / 10% on band over US$2,795
100,001 – 200,000 (US$11,194) / 15% on band over US$5,597
200,001 – 300,000 (US$16,792) / 20% on band over US$11,194
300,001 – 500,000 (US$27,955) / 25% on band over US$16,792
Over 500,000 (US$27,955) / 30% on all income over US$27,955

There are no personal allowances that can be deducted from the gross income. No tax credits are also extended to residents earning foreign-sourced income and taxed on said income by foreign governments.
The Nicaraguan government is focusing on attracting foreign retirees to buy properties and then move to the country full-time for their retirement.
It is now very easy to become a permanent resident of Nicaragua, taking approximately one year. Qualifications:
1. an investor with at least US$40,000 of property; or
2. a demonstrated monthly income of at least US$500/month in the country of origin
Another attractive residency package scheme is Nicaragua’s Pensionado program. Foreign retirees are allowed to bring US$10,000 of household goods and other personal items duty-free on first arrival, and bring a vehicle into the country tax-free once every five years. Another perk is an exemption from income taxes on income generated abroad.
Foreign investors under the Foreign Investment Law 344, may (but are not required) to register investments and negotiate a foreign investment agreement with the Ministry of Economy and Development. This guarantees the investor repatriation of foreign capital, remittance abroad of the net profits and effective compensation in the case of expropriation.

Real Estate Tax (Impuesto de Bienes Inmuebles or Predial)
The property tax is levied at a flat rate of 1%. The tax base is 80% of the cadastral value of the property (land, buildings and permanent improvements), as assessed by the municipal cadastral office. The tax is paid to the local government (“alcaldias municipales”).
However, property taxes are less important in Nicaragua than elsewhere, due to a failure to establish an up-to-date national cadastre. Reportedly, many smaller municipalities do not even collect the tax, as has been their responsibility since 1992, owing to lack of knowledge or technical capacity. Also, additional problems arise in many areas as a result of the insecurity and confusion of land titles, which makes it difficult to know who is supposed to pay the tax. Thus, paying local taxes in Nicaragua has been described as a voluntary act.

Capital Gains Tax
Capital gains earned through selling real estate properties in Nicaragua are taxed at the ordinary income tax rates.

Nicaragua, make your dream investment come true.