When investing in real estate abroad, buyers are often preoccupied researching real estate prices, health care facilities, and quality of life, that they forget about real estate taxes. These can make or break an overseas investment. Real estate taxes abroad are significantly less than those in the States, and if you do a little research, you will find countries where these taxes cost next to nothing. Have a read below for an insight into some of the lowest real estate taxes in the world.
Belize
Belize may be small and relatively unknown to the outside world, but don’t underestimate this country. Every corner of Belize presents a colorful new canvas of culture and history. Once you experience the laid-back lifestyle, cost of living, and welcoming people, you could find it optimal to make Belize your home.
In comparison to many Central American and even Caribbean countries, Belize is a dream regarding property ownership. Property ownership in Belize is ardently protected, and foreigners have the same rights as locals.
Belizeans are so adamant about maintaining control of their real estate that they vehemently oppose property tax increases. Understanding the people’s position, the government continues to keep these taxes low. Annual property tax is usually around 1% to 1.5% and is calculated on the undeveloped land’s value. Property tax is levied and controlled by the respective city councils in each district. Local councils offer discounts of up to 15% if property tax is paid early and a yearly 25% discount for residents over 65 years old.
Transfer taxes, known as “stamp taxes” in Belize, cost 8%, while an attorney will cost around 2% of the total property cost. Belize has zero capital gains taxes, which is a huge bonus when investing in real estate here.
Mexico
Mexico is hands down the easiest and most popular retire-overseas option among Americans and Canadians. It’s easy to understand Mexico’s appeal, apart from its ease of access to its neighbors up north, this North American country boasts a famously tropical climate and a wide selection of world-class beaches. On top of this, property taxes in Mexico are some of the lowest in the world.
When purchasing property in Mexico, you will need to pay an “Acquisition Tax”, to become the owner of the property, this is between 2% to 4.5% of the property value. Annual property tax, known as predial, is calculated as a percentage of the appraised value of a property. Note that the appraised value has no relationship to the actual purchase price of a property, and appraisals and tax percentages are deliberately set low to reduce the tax burden on poorer Mexicans. In addition, you can avail of up to a 25% discount if you pay your predial in advance.
Other real estate taxes you will need to pay in Mexico are rental income tax if you profit from renting out your property and capital gains tax when you are selling your property. The amount you pay for capital gains tax will depend on various factors; how much of a profit you have made on the sale, how long you have lived in the property, and more.
Panama
Panama is a land where the cost of living is low, the standard of health care is excellent, and the climate can be idyllic. Panama boasts Pacific and Caribbean shorelines with wildflower-covered mountains in between, real-world infrastructure, and the U.S. dollar for currency. Hiding the smartest beach, river, and mountain property buys, plus some of the lowest property taxes anywhere on the planet today, Panama is an attractive destination for expats interested in real estate.
To promote development in Panama, newly built units are granted property tax exemptions of up to 15 years. Tax exemptions are also awarded for the first US$120,000 of your primary dwelling and the first US$30,000 of your second property. Regarding principle dwelling homes valued over US$120,000, 0.5% tax will apply, while a 0.7% tax will apply to principal dwelling homes valued over US$700,000.
Transfer tax is applied to the seller when real estate is sold and costs around 2% of the sale price. Capital gains tax has to be paid when selling real estate in Panama, which amounts to 10% of the profit made. If selling more than one property a year, you will have to pay income tax on these sales instead of capital gains tax. For an in-depth look at taxes in Panama, consult our definitive guide to taxes in Panama here.
