From its secluded beaches to its steamy rainforests, Belize is a country of diverse natural beauty. Its slow pace of life makes it a popular tourist destination, and cost of living is still reasonable. For the more adventurous traveler, activities can include a trek into the jungle in search of Maya ruins, spotting parrots, toucans, and maybe even a jaguar along the way.
It’s true that Belize is no longer the most affordable place to buy property, but this country has other benefits: economic stability, a stress-free lifestyle, and a cost of living that is a very good value compared with the U.S. (or even other Caribbean destinations).
Expats have long sought property on Ambergris Caye and the small neighboring islands, home to some of the most beautiful oceanfront real estate in the world.
Anyone looking for bargains may be even more interested in the Corozal District, where prices are lower than in many areas on Ambergris Caye.
Placencia, on the south-central part of the coast, is the other area of Belize that has long attracted property buyers from other countries. Today, bargains are scarce in Placencia itself, but you can find some excellent buys in nearby coastal areas and even to the south in the Toledo District.
Why Should You Consider Buying Property In Belize?
Belize, the little Central-American nation, casts a spell—especially on those with a spirit of adventure. Attractions include the warm, English-speaking people, the natural beauty, and the air of freedom and opportunity.
For many years, the country has drawn people from all over the world who want to live in the sun while taking advantage of the country’s real estate bargains and reasonable cost of living. Add to that the protection of assets and terrific fishing and diving and you can understand why Belize captivates so many.
And today changes are taking place that make the lure even stronger. Real estate transactions are easier, highways and airports have been improved, and there are a growing number of banks, investment houses, and trust companies that can help your assets grow.
A Guide To Purchasing Property In Belize
Real estate transactions in Belize are relatively straightforward and inexpensive, thanks to a reduction in taxes and updated rules for land registration. Today the tax on property sales, known as stamp duty, is 5% of the price, with the first $10,000 being exempt. Meanwhile, the Government of Belize is incorporating more areas of the country into the Registered Lands system which provides for a clearer form of title called a Land Certificate. The process is designed to create a uniform system of nationwide property ownership.
Property owners have other big advantages in Belize—no capital gains tax and low property taxes. Despite all the advantages, buying property in Belize should be done carefully with a keen eye for details. Doing your due diligence is essential, no matter how good a deal looks.
Like many other countries in Latin America, Belize places few restrictions on who can become or present themselves as real estate agents. In fact, there is no licensing regime in Belize for real estate agents at present, which means there is also no oversight. While the majority of agents are legitimate, anyone buying property in Belize should be careful not to let the prospect of a good deal cloud his or her judgment. Deals can look especially good in Belize, where property is often less costly than it is in the U.S. or Europe. In practical terms, this means acting on the advice of professionals, typically attorneys-at-law, whose job it is to spot problems. At the same time, don’t forget to take precautions that might come more naturally at home. Here are some guidelines:
- Don’t hand over any money without first retaining a reputable lawyer to review the contract.
- Don’t buy into grandiose schemes for future development.
- Title insurance may not be worth the 1% of the property price that it now costs in Belize. But if you don’t buy title insurance, make sure the property comes with a registered title certificate.
Second Home Tax Benefits In Belize
Second homes usually aren’t thought of as tax shelters, but they have very similar advantages—whether the homes are inside or outside the U.S. IRS rules, for example, let you avoid capital gains tax if you’ve lived in the home for at least two of the last five years before selling it. The limit on this capital gains exclusion is $250,000 for an individual or $500,000 for a couple. While few Americans will take out a mortgage in Belize, those who do will have another tax advantage—the ability to deduct mortgage interest and property taxes.
Even better, you can rent the second home for up to two weeks a year without being required to report the rental income to the IRS. On the other hand, if you do rent the second home for more than 14 days a year, you lose the mortgage and property tax deductions, but you can then deduct management fees, repair costs, and depreciation up to the amount of the rental income as long as it doesn’t exceed $25,000 a year.
Unfortunately, many IRS rules on second homes are complex. In fact, using second-home deductions may subject you to the alternative minimum tax (AMT) that the government can levy against individuals who wouldn’t otherwise be required to pay tax because of, say, an accumulation of losses or deductions. For that reason, it’s important for overseas residents to consult an accountant or tax attorney who is familiar with their specific situation.
Ownership Issues In Belize
After your lawyer has assured you that the title to the property you plan to buy is unencumbered, it’s still wise to invest in title insurance. In the U.S., buyers of property have come to rely on title insurance to guarantee that they actually own the property they purchase. Today this type of title insurance policy is available in nearly every market in the world. Even retaining the best attorney doesn’t eliminate the need for protection that insurance provides.
It is important to work with the title company and the attorney from the beginning of the purchasing process. For protection against boundary disputes and encroachments and other unregistered interests for instance, the title company would need the attorney to work with the seller and get affidavits on these issues. If the title company becomes involved too late in the process, it is harder to obtain information from the seller. For the same reason, it’s smart to spend money on a survey of the land. If this is done before the sale, you will know immediately about any problems with neighbors. If there are problems, you’ll be in a much stronger position to get the seller to resolve the issues before the sale is consummated.
Title insurance is designed to protect against a loss when the title to property is other than as insured. Specifically, your policy needs to insure against losses caused by title defects, liens, and encumbrances. In the event that your title is disputed, for example, you’ll want the title insurance company to provide a legal defense for you. In the event that you lose the case, you’ll then want the insurer to compensate you up to the amount of the policy. As a policyholder, the idea is that you get this protection and security for a one-time premium.
The legal-defense portion of the coverage can be critical. If you’re sued over a title matter in a foreign country where you don’t speak the language or understand the laws, you can be at a great disadvantage. A sound title insurance policy, however, gives you a representative who will stand by you in response to the challenges to your title and defend your property rights in the country where your property is located. When you buy a title insurance policy for foreign real estate, be sure that, at the very least, it covers these threats to title:
- Ownership issues—what if the property isn’t really yours to own?
- Liens, mortgages, contracts, options, or other encumbrances on the title.
- Fraud and forgery issues, including those that might have resulted from undue influence, duress, incapacity, or impersonation.
- Rights of access to and from the land and covenants limiting the use of the land.
- Transfer problems, such as unauthorized conveyances by a corporation, partnership, trust, limited liability company or other legal entity, or one derived through defective judicial proceedings.
- Documentation disputes, such as the invalidity of a document executed under an invalid power-of-attorney, or one improperly executed or recorded, or one with an erroneous or inadequate legal description of the land.
Costs Of Buying Property In Belize
Once you find property that you want to buy, with the help of an attorney or a real estate agent who uses a legal sales agreement, prepare an Offer of Purchase to present to the owner.
The offer should include your name, the name of the seller, the property’s legal description, the purchase price you’re offering, and the terms of the deal. You submit this with a deposit—usually 10%.
In addition to the 1.5% to 2% that an attorney may charge, there’s a stamp duty (land-transfer tax) of 5% on all but $10,000 of the sales price, plus a variety of fees to register the property in your name. In the end, closing costs are likely to be about 7% to 8% of the sales prices, depending on whether you buy title insurance.
The bottom line: To close on a $150,000 real estate purchase, for example, typical closing costs would total between about $11,000 and $12,000, depending on the purchase of title insurance.