Central America One Stop

FAQ

What are the laws governing Property Ownership by Non-Citizens?

Panama:

Foreigners in Panama enjoy the same property ownership rights as Panamanian citizens. Currently there is no property tax on properties constructed after 2004.

Costa Rica:

Property laws in Costa Rica are the same for nationals and foreigners. You don't need to live in the country to own land or property, and the country has no property tax.

Nicaragua:

Property ownership in Nicaragua is fee simple/freehold, with title issued and registered in your name.

Honduras:

Foreigners enjoy the same rights of property ownership as Hondurans and can purchase up to three-quarters of an acre as an individual, or more by forming a Honduran corporation.

Mexico:

It is perfectly legal for foreigners to own Mexican real estate, including land and properties located in the restricted zones: within 50 kilometers of the coast, and within 100 kilometers of international borders (these lots require purchase through a bank trust called a fideicomiso)

What is the current government system? Are candidates elected & how long is their term?

Panama:

Is a Constitutional Democracy with elected officials that serve a 5 year term (can not serve consecutive terms). Their legal system is based on Civil Law.

Costa Rica:

Is a Democratic Republic with elected officials that may serve a single 4 year term. Their legal system is based on Spanish Civil Law.

Nicaragua:

Is a Republic with elected officials that serve a 5 year term (can not serve consecutive terms). Their legal system is based on Civil Law.

Honduras:

Is a Democratic Constitutional Republic with elected officials that serve 4 years (can run in consecutive elections.) Their legal system is rooted in Roman and Spanish Civil Law, with an increasing influence by English Common law.

Mexico:

Is a Federal Republic with elected officials that may serve a single 6 year term. Their legal system is a mixture of US Constitutional theory and the Civil Law System.

What are their real estate tax laws?

In Central America, property taxes are based on the “assessed” value of a property which is typically 30-40% less than the actual cost.

Panama:

Houses or apartments where construction permit is issued after Jan. 1, 2004, will have the following exemption on property tax:

Value up to $100,000: 15-year exemption
Value from $100,000 to $250,000: 10-year exemption
Value over $250,000: 5-year exemption.

The exemption is transferable during the exemption period to any new buyer.

Costa Rica:

The current annual rate is 0.25% of the assessed value, and are usually paid quarterly.

Nicaragua:

The annual property taxes are approximately 1% of the assessed value of the property.

Honduras:

Collected by the municipality, the average amount levied is 0.25%.

Mexico:

The property tax on Mexican real estate is called predial. It is a local tax and in most areas is payable quarterly. The average is approximately 0.1% of the assessed value of the property at time of sale.

What are the closing costs involved in the purchase? (ex. On a $100,000 purchase)

Panama:

The buyer must pay the expenses regarding title at the public registry. The amount to be paid is estimated according to article 314 of the Fiscal Code. As a general guide, closing costs are similar to the United States and typically amount to around 3% (including legal fees, registration and notary fees).

Costa Rica: (usually split 50/50% between the buyer and the seller)

*Transfer tax (3% of the registered value): $450

*Public registry fee (0.05% of the registered value): $75

*Tax stamps, including $20 for a municipal stamp, $20 for a hospital stamp, $10 for an agrarian stamp, $2.50 for a bar association stamp, $2.50 for a fiscal stamp and $0.05 for a national archive stamp

*A notary fee of $1,250, based on 1.5% of first million colones of the sales price and 1.25% of the remainder.

Nicaragua:

Very few fees apply to anyone purchasing in Nicaragua. A fee applies for recording deeds with the public registry, however, it is capped at about $345. On occasion you will pay a year of property taxes in advance, but closing costs for the buyer in Nicaragua are minimal.

Honduras:

Transfer taxes and associated closing costs will amount to about 7% of the reported price of your property.

Mexico:

The closing costs in Mexico are usually paid by the buyer. Fees for closing, in a regular transaction, usually come to between 6% and 7% of the cost of the property. The fees will cover an acquisition tax, property-registration fee, a fee for the tax certificate, the title-search fee, the property-appraisal fee, the notary’s fee, and any miscellaneous clerical fees, as well as a value-added tax on anyone whose services were engaged in facilitating the transaction (the appraiser, the notary, etc.).

What is the primary currency for the country?

Values Updated July 2008

Panama:

The US Dollar and the Balboa. They are equivalent. 1 Dollar = 1 Balboa

Costa Rica:

The Colon. Approximately 555 Colones per 1 US Dollar

Nicaragua:

The Cordoba. Approximately 18 Cordobas per 1 US Dollar

Honduras:

The Lempira. Approximately 19 lempiras per 1 US Dollar

Mexico:

The Peso. Approximately 10 pesos per 1 US Dollar