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#19378 - 06/20/05 05:49 PM New 15% Real Estate Transfer Tax
Lan Sluder/Belize First Offline
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
Lan Sluder/Belize First

#19379 - 06/20/05 06:32 PM Re: New 15% Real Estate Transfer Tax
Certainly makes buying property in Belize a lot less attractive.

#19380 - 06/20/05 08:20 PM Re: New 15% Real Estate Transfer Tax
Sir Isaac Newton Offline
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.

Check out my site: www.ambergriscayerealestate.net

#19381 - 06/20/05 08:42 PM Re: New 15% Real Estate Transfer Tax
Lan Sluder/Belize First Offline
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
Lan Sluder/Belize First

#19382 - 06/20/05 08:51 PM Re: New 15% Real Estate Transfer Tax
Lan Sluder/Belize First Offline
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
Lan Sluder/Belize First

#19383 - 06/20/05 09:18 PM Re: New 15% Real Estate Transfer Tax
Gaz Cooper Offline
For those in the know ;-) there is already a loophole and a way around the increases :-)

#19384 - 06/20/05 09:30 PM Re: New 15% Real Estate Transfer Tax
Ernie B Offline
No Chit.
Gun Control is Hitting Your Target.

#19385 - 06/20/05 10:18 PM Re: New 15% Real Estate Transfer Tax
Djean Offline
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"

#19386 - 06/21/05 12:34 AM Re: New 15% Real Estate Transfer Tax
Kra-Z-K Offline
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.

#19387 - 06/21/05 10:58 AM Re: New 15% Real Estate Transfer Tax
Sir Isaac Newton Offline
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.

Check out my site: www.ambergriscayerealestate.net

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