Although there is still some confusion about the changes made last week in the real estate transfer tax, especially as regards its implementation date, it appears that the new "stamp duty" rates for real estate purchases are:

15% of selling price for everyone except Belizean citizens and Caricom nationals
5% for Belizeans and Caricom nationals

Taking a big hit are Canadians, Brits and other Commonwealth citizens, who formerly had to pay just 5% transfer tax, but who now pay the same as most other foreigners.

Also, the government moved to eliminate the loophole for Belizean corporations started by foreigners who previously could get the Belizean 5% rate. (Of course, in theory one could start a corporation in a Caribbean country and move it to Belize.)

I don't know how others feel about it, but in my opinion this could be the straw that broke the camel's back regarding real estate purchases by foreign citizens.

With the 15% tax, plus attorney's fees and miscellaneous costs, the "surcharge" to buy real estate in Belize for most foreigners is now nearly one-fifth of the purchase price.

On a US$300,000 condo in San Pedro, that would be US$45,000 plus attorneys fees and other closing costs.

In cash.

Guess some wealthy buyers wouldn't blink at that, but I think many ordinary buyers would find it pretty steep.

If there were a 15% surcharge upfront on real estate purchases in the U.S. or Canada, I suspect it would quickly burst the real estate bubble.

I also wonder now that the government has decided it will severely penalize foreign buyers what else it may have in store for them? Like a new non-citizen property tax rate? Or a capital gain tax for foreigners only?

--Lan Sluder
www.belizefirst.com

Certainly makes buying property in Belize a lot less attractive.

The new 15% tax on the sale is only a 5 point increase over the previous 10%. And yes, folks did set-up Belizean companies to save another 5 points, this was a grey - bordering illegal activity.

I was amazed it took them this long to close up that loop hole in the past legislation.

Considering the annual property taxes in Belize are next to nothing (compared to the US municipalities), the 15% upfront charge is not "going to burst any bubbles" for professional investors. This is especially the case with the continued high level of real investment activity here in Belize and Ambergris Caye, where there is no taxes on capital gains.

Hopefully the added income will assist in the implimentaion of a real estate policing agency to license and monitor all local realty companies. The current "hang a shingle" law needs to revisited.

SIN

The "only 5 point" increase as a percentage of the base is a 50% increase for U.S. citizens and most others. The increase for Commonwealth citizens is 300% -- from 5 to 15%. Guess a 50 to 300% increase is nothing for "professional" real estate investors and wealthy Belizeans, but for ordinary folks it seems fairly substantial.

As to whether it will make a difference in sales, I'd say time will tell. I've personally heard from about a dozen would-be buyers today alone, mostly Canadians, and they say they are thinking twice now about buying in Belize, but maybe they will change their minds.

If the tax money goes toward professional real estate licensing regulation, I would be very surprised. I suspect the money will go to paying debt service.

Belizean real estate taxes currently are low, but as I say, if Belmopan can raise real estate transfer taxes on gringos by up to 300% in one fell swoop, what's to prevent the politicians from raising real estate property taxes on foreigners by several hundred percent tomorrow? Or imposing a capital gains tax on non-citizens?

Foreigners don't vote and, unless you're a Lord Ashcroft, have little political influence.

--Lan Sluder

Also, as a practical matter, what I think will actually happen is that for transactions that go forth there will be under-the-table deals to reduce prices and pay the difference outside Belize, to avoid high taxation.

In the long run, this will result in lower tax revenues for Belize, along with fewer sales of Belize property for those who handle it in the legal fashion.

Everybody loses -- the Belize government, Belize property owners and would-be foreign buyers.

--Lan Sluder

For those in the know ;-) there is already a loophole and a way around the increases :-)

No Chit.

pay your fair share of taxes to the government, it goes to assisting the community with education ,health, infrastructure, etc.


Don't try to find "a way around the increases"

Djean has a great point. What about all of the other taxes we pay here in the US. We pay it on everything and the amount is far higher than the amounts on most of the other taxes in Belize.

The funny thing is, the gringos that have been around a while continually repeat, "this is the final blow", or, "this is the straw that....", or, "people will just stop comming". But guess what, tourism is still on the rise as well as foreign investments. The country is too unique and has too much to offer to ever be held back.

I agree with the GOB, less people paying more money. If you want cheap, head for Thailand.

SIN

Apart from "Rich Gringos" have a tax hike, don't forget that the Real Estate Agencies that handle business in a legitimate fashion were just hit with a raise from 4% of gross up to a 15% of gross tax.

Belize is experiencing growing pains and although it is never the popular decision, somebody needs to pay for the improvements in the quality of life, health, education and infrastruture of this nation.

Granted, Belize is not a "cheap" destination and it definitely is not a cheap place to live. But I'll tell you one thing, you couldn't PAY me to live anywhere other than here!

We gripe, but life will move on.

Perhaps folks should realize that if they want to own a little bit of paradise they need to pay their debt to our society too!

Environmental taxes, income taxes, import duties, stamp duties - these are all due and payable in most other nations in the world, why not Belize?

We must all pay for the priviledge of calling Belize our home - or our home away from home.

Get back to why we really love it here - fresh air, wonderful people, pure rainforest jungles and world class scuba diving.

LIFE IS GOOD!

exactly

AMEN TO THAT! Well said Amanda!

It's like the guy that gets MAD at you when you stop giving him free cigarettes, when he should thank you for all the free smokes recieved in the past.

Hey Garry

That isn't gonna work.

The law now states that when you make the committment to buy real estate, the stamp duties (transfer taxes) are payable at that time.

Typically the agreement for sale contract is recorded as a lien against the title to the property and when the lien is recorded the stamp duties will be due.

If the buyer defaults on an agreement for sale the seller can (in the event that he paid a developer tax) be eligible to file for a tax rebate.

How does this all apply to a condominium since the association owns the land?

Thanks Amanda for the update while I try to stay up on real estate issues things are changing fast here as we are all finding out.

thanks for correcting me and bringing me up to date

regards

Gaz

(Unfortunately I put this post on the other thread with the same title...might as well plunk it here as well...sorry if some points made by other folk are repeated).

A few people might be missing the point here: SIN, it's a 50% increase in tax for many folk which is massive. For Residents, Commonwealth Citizens and Belizean Corporations it's a 300% increase which is just obscene.

Amanda: I don't mind paying taxes but shouldn't we actually get some kind of infrastructure investment in return? I mean, is "just liking it here" reason enough to stay quiet while our wonderful governement rapes and pillages our adopted country. I have viceral objections to sending even more money into the den of theives that is our present government. They will just steal it or use it to promote their pet cruise ship projects. Trust me, they'll find a way to pocket it all and they'll do it while extending a large middle finger to the people of Belize.

Here on A.C. our roads are the running joke of the rest of the country. San Pedro Town is easily the second biggest settlement in Belize (only Belize City is bigger) and yet our roads are by far the worst of any town. If we could get just 20% of the taxes that originate from Ambergris invested back into infrastructure here we could have proper roads, a modern and well equipped primary school, and a well equipped and properly paid police and firefighting force all within 2 years.

But, like any stupid dumb fool I go and pay my taxes anyway. I must like it here too.

One more thing: How do we as realtors tell someone who has already signed a contract that they will have to pay 50%-300% more transfer tax than they thought they were going to pay because the government enacts a tax increase at zero notice?

I haven't researched this increase yet, I'm just typing out of sheer shock at the nerve of Musa, Fonseca and co. Bear with me.

Now I have heard some different news: Belizeans, Caricom citizens, Belizean corporations will pay 7%, all others will pay 12%.

Amazing stuff.

Rumours circulating around Belmopan that Sales Tax will go from 9% to 15%.

Astonishing.

It could change again, but the 7% and 12% were the original numbers, and the 5 and 15% were what was actually approved on Friday. A couple of newspapers initially reported the 7 and 12%, and Channel 5 reported the 5 and 15%, which could be a source of confusion.

--Lan Sluder

Umm............

Orange Walk City

and

San Pedro/Santa Ellena are bigger than San Pedro.

Leaving the political rhetoric out - RAISE TAXES! Hell yeah! Might slow down the migration to La Isla. Hey, we may just might have to go back to "Where the Hell is Belize".


Righteous.

All of this tax talk brings up some interesting points. How much can it take $ wise to run a country of 250-300 thousand residents? What is the tax dollar in Belize spent on? The BDF has 4 aircraft. The fire and police service is minimal. Recreation facilities for the youth are in disrepair or non existant. Educational facilities are lacking in all areas. And in SP the brunt of hosting most of the overnight tourists is passed on with minimal help from the GOB. If an area generates most of the tax dollars, it should be rewarded by ample tax $ to keep up the infrastructure(an old argument I'm sure!). It's a sad position the good people of Belize have been placed in financially. Belize seems to be at a serious crossroad. So what is the answer...higher taxes? A new GOB? Gaz, SIN, Amanda, Lan, Chris, Djean...any plans?

SIN, no way Orange Walk or San Ignacio/Santa Elena are more populated than San Pedro. Yes, if you count the villages tens of miles away...ie, almost the whole districts. But, in terms of urban sprawl, San Pedro is wayyy more populated. In 2003 BEL informed me that we had 4000 electric meters on the island. That was 2 years ago. At the same time the GOVT census came out and said we had about 7000 souls. Now, was the govt. suggesting we have less than 2 persons per electric meter? I highly doubt it...there are apartment buildings here with one meter and 30 people living inside. Single family homes with 5 or more folk are common. I doubt our population is less than 20,000. Bear in mind that most of the population of Orange Walk and Corozal Town as well as Benque have re-located to Ambergris due to lack of employment opps. in their home towns.

You should try flying over Orange Walk Town and San Ignacio and comparing that with what you see when you fly over San Pedro. No contest.

SIN, how are YOUR taxes affected by the new rates? How are your timeshare commission taxes being affected?...My own taxes went up by 400% and that doesn't include the new round of increases that your Belize-raping friends in Belmopan are planning.

(chuckle)

easy now bredren ... we don't need to make it personal.

I pay my fair share of taxes and THANK GOD it's about 300% less than what I would pay in the US or Canda or UK.

It's about time the taxes have been raised, to closer to where they should be. It's funny, I don't here any employees (bulk of tax base) complaining about 25% income tax on their wages. BECAUSE THEY HAVE ALWAYS PAID IT!

20k in San Pedro? - never. I did like the electric meter theory though, interesting.

OW and Cayo - urban - have a higher population, a bit more than SP and all of Ambergris Caye. Check the stats.

Well, we must like getting raped. First re-election in history and watch 2008, THREEPEAT!

Hey, if you don't like it 1) run for office or 2) move...........

Sorry dude, just an opinion, we all have em'.

SIN

Hi Chris

The fact of the matter is that the elected government and appointed cabinet have passed some new tax increases. Now simply because you don't like the government and players that are currently in power, and just because you might personally feel that none of the money is being utilized in a manner that you feel is appropriate, the fact remains the same. If you live here and you enjoy the life and feedoms that Belize offers you - YOU TOO MUST PAY YOUR TAXES.

If you don't like it use your power to vote and your eloquent penmanship to drum up more votes for the other political party. That is the only way that there might be a chance in changing these new rates.

No, I am not happy with the tax increases that have been imposed on the real estate industry, I also don't enjoy explaining the new rates to our clients, but do it I must.

You must love something about Belize to have survived here for so long. San Pedro isn't picture perfect and we all need to do our little bit to try and improve our home.

I am glad you discovered that moving to Mexico wasn't the answer to San Pedro's problems!

I still would rather live here than anywhere else!!

SIN, the govt census of Ambergris Caye is waayyy off whack. For Hurricane Mitch (1998) it is estimated that over 8000 people evacuated Ambergris Caye. And, no, the majority were not tourists...it was October, after all. One of the problems we have on Ambergris Caye is that many of the folk from other towns in Belize who live here full time for the work that is offered will go back to their home districts every few years...to vote. I would certainly agree that our voting base here on Ambergris Caye is pitiful when compared to our full-time population.

Amanda, I DO pay my taxes, I actually make the point in my earlier post. Why do you imply otherwise? By paying my taxes I'm entitled to the "freedoms that Belize offers" to express my opinion. I hope that's OK with you.

One more edit....I should make the point that I did vote for this government at the last two elections. My mistake, I'm paying for it now.

Chris

I did not imply that you don't pay your taxes. I simply stated that tax paying is inevitable.

Of course you have the right to express your opinions, at no time did I state that you can't. Like taxes, expressing your opinion is inevitable.

Ha, ha.... I can't believe you voted for this government - must of been sucked in by the manifesto.

I voted for this government too, so I realize we need to take the lumps with gravy.

Chris, you and I are in the same business - a highly lucrative business. As SIN has pointed out, our taxes are now in line with the income we produce. Those who make more should pay higher taxes in order to help those that are living on the poverty line.

BTW my taxes didn't increase by 400%, what do you do that I don't?

Amanda, Our Business tax under the old system was 4% as Real Estate Professionals. We were re-classified into Commssion Agents. We are no longer classified as "Professionals." Our Business Tax went up to 15%. Whoaa there...you're right! I'm sorry, I meant to say my taxes went up by only 375%. 400% was a gross exaggeration of the truth on my part. Seriously, I don't mind paying the tax increase, I'm just worried that the money will be stolen by the Usual Suspects (who I stupidly voted for) in Belmopan. I fear those living on the poverty line will see none of it.

I'm much more worried about the negative market effect of an increase in Property Transfer Tax which is where this thread started. Fact is, this government would get a HUGE infusion of tax dollars if they put the transfer tax DOWN to 5% for everyone. It would stimulate buying and selling like crazy. Everyone would win-win.

If/when the transfer taxes do go up to 15% anyone buying a property knows they will have to sell it for almost 20% more than the purchase price within the first year just to break even. It will depress our industry.

Hi Chris

I hate to be the one to provide the basic math lesson - but our taxes actually increased 275%.

Original tax 4% New tax 15%

New tax minus old tax divided by old tax equals the difference - 275% increase.

The tax rates are rough - they are high and it is going to take some mind numbing for it not to hurt everytime somebody has to write a cheque to the GOB.

I agree with Chris, if the government lowered the rate to 5% across the board it would probably end up collecting more money. People would simply pay the tax instead of rushing around trying to figure out ways to get around or deferring the duty involved.

Very true, Amanda, I do need the lesson in basic maths. 275%, correct indeed. I should have said that the new tax rate is 375% of the old rate.

I think we could organize and fight the property transfer tax hike...if we can persuade the powers that be that tax revenues will decline because of a steep drop in sales perhaps they would change their minds....are you up for it?

You organize...You stipulate the conditions and Belmopan delivers.

It's called...We the people taking back our POWER!

My guess is that it is "whoever has the most money and gives it to them, can get whatever they want".
"We the people...." isn't a concept that Belize is ready for yet...... the only people who care enough to take action are already in power.

Those who are completely jaded with Belize please stand up, turn around and leave!

Those of us who love our home and plan to stay here will survive.

Chris, I'll have to think about it. I have found through many, many years of experience that lobbying for change takes so much energy and time that I begin to neglect my livelihood, and with 3 kids to feed and a fair sized mortgage to attend to, I don't know if I am up to the challenge right now.

I have finally come to the conclusion that lobbying, letter writing and face to face meetings to effect change are better led by empty-nesters. Are you up for the challenge?

Anyway, enough about this subject - what's next?

Amanda,
Completely jaded??? No, but realistic about the issues-- absolutely! But why would you deny my right to voice my opinion.....
I know that you would much rather I shut up, so you can continue to sell property. I have gotten that message from you and others on so many occasions.
I still say that Belize is a wonderful place to live, if that's what you are looking for. The water is beautiful and there are some terrific people on that island. I think everyone should visit at least once in their lifetime. Island life is not for everyone. Belize is not for everyone.
But thanks for the invitation to stand up and leave.... I already did.

"read my lips.......... no new taxes"

You don't need to shut up for me to sell real estate. Our real estate sells itself, we simply guide the buyers through the pitfalls so that they land on their feet and don't get too many surprises.

Honestly the taxes won't necessarily deter the people that I sell to. The vast majority of them stil find our real estate and tax structure much less imposing than where they are coming from. Most of our buyers are not starting a new life but rather purchasing a vacation home. So, if their vacation home costs $10K or $20K more than it would have done 6 months ago, they simply adjust their budget. Most people that we sell to are intelligent, realistic folks that don't expect life and government in Central America to be just like it is in the first world - in fact that is one of the main reasons why they decide to embark on these adventures in real estate in Belize.

As with the stock market - if you can't afford to walk away from the investment and be willing to try again - you are probably not ready to invest.

Yes, the tax hike will affect the regular joe that lives here in Belize and it will affect the plans of some of the folks that would like to try living the "dream" - we shall all need to tighten our belts and make larger allowances in our budgets, and perhaps even defer our plans for a while.

For those of you who are truly interested in the reaction of our "pending" buyers to the new stamp duty rates - today I have informed 3 clients of the potential that the stamp duty to be imposed on them (as the alien stamp duty for title transfer) shall be somewhere in the region of 2 - 5% higher than initially presented to them - not one of them has kicked a fuss or threatened to invest elsewhere.

This is a ONE TIME only tax based on the purchase price of the real estate. Property taxes are still next to nothing - annual taxes on a $250K condo are around $225 US per year. Annual property taxes on a $300K piece of land is around $500 US per year.

Amanda, it's my turn to give you a maths lesson:

From 5% to 7% is not a 2% increase...it's...well, I dunno, it's MORE. Like 40% more.

From 10% to 15% is not a 5% increase....it's, well, MORE. Like 50% more.

From 5% to 15% (for residents, commonwealth citizens etc) it's 200% more.

There has never been an instance in the modern Free World where raising taxes by such a high percentage has stimulated increased governement revenues and there has never been an instance in the modern Free World where an economy has benefitted from such increases.

Costa Rica, Property Transfer Tax 3.01% (which it just recently went up to). And, Costa Rica is SERIOUS competition for Belize when it comes to overseas investment.

With or without anyone's help I'm going to protest these increases. Read the papers next week.

imho..Instead of giving each other math lessons, give GOB a math lesson, they have to understand that if they have 20 dollars a day to spend, they can't spend 29 dollars a day!
These tax increases are difficult but we can only hope that the GOB will be a little more financially responsible. I believe that even if the opposition got in tomorrow that possibly even higher taxes would be levied, the country is broke, deep in debt and we are going to have to pay.

"Figures don't lie, but liars figure."

But anyway, Chris ....... you win!! (although I didn't think this was a contest).

What is more important than a five pecentage point increase totalling 50% more than the previous tax rate???????

THE ATTITUDE OF THE SALES EXECUTIVE.

Negative attitude = negative sales numbers. Directly the opposite for the positive minded (no need to name names here). It's obvious who will be selling and who will be telling, excuses why their numbers are down.

For those who can't see the benefits of owning in Belize -vs- Costa Rica, should in all right, purchase there.

If you can't change the tax, you better find a way to but a positive spin on it, because your potential buyes will smell the negativism a mile away and will seek out those who give them a better vibe.

Sales basics.

SIN

SIN,

I have never met a stupid real estate buyer. Everyone who walks into my office is intelligent enough to ask the right questions, and they do, and I'm not going to spin my answers to get around the truth. I am going to tell people the tax rates as part of any presentation. I have to explain what it costs to buy property in Belize and I'm going to let my clients decide for themselves. I don't compare our costs to other countries. I mentioned those rates in Costa Rica as part of a message board debate, not a sales presentation to a client.

There will be no positive or negative spin on the taxes, I'll just leave it to my clients to make their decision.

Anyway, no thanks for the "sales basics" lesson, you're selling timeshare and I'm selling real property. The two are apples and oranges. Your buyers are subject to high pressure techniques that I could never justify using in my office.

SIN, one question: Why is it that this government can do no wrong in your eyes?

They do a lot of wrong.

Whenever and wherever there is a Government that does NO WRONG, the largest exodus in history will be witnessed from the remainder of the imperfect World.

Shedding positive light on a situation is not "getting around the truth". How can you get around the truth of a 15% tax? Seeing the glass half full on the other hand, is a positive spin. Pointing out that it is half empty, well ....

Nobody likes paying more taxes, gas prices, utility bills, and so on. Some don't like the current Government. Realizing the only "real" alternative helps to keep things in perspective.

SIN