Can a foreigner own property in Nicaragua?
Law 344 states there is equal treatment for foreign and domestic investors.
Buying property in Nicaragua is relatively simple and easy as long as you have someone to walk you through all the steps.
Finding a Property
There is no MLS (multiple listing service) in Nicaragua. Obtaining a clear understanding of the value of properties is challenging. At In Nica Now we will only feature properties that are good value for the money. There are hundreds of listings between the plethora of realtor sites. A knowledgeable realtor you trust is invaluable. We can help wade through the vast array of available properties.
Making an Offer
Your attorney will draft a sales contract which is a formal legal offer outlining the details of the sales agreement. The closing date is commonly 30 to 60 days from the offer date. This provides the lawyer time to complete due diligence. The lawyer will research the history and title of the property to ensure there are no disputes or liens and that all taxes are paid. If the property is considered coastal (200 meters from the mid high tide line) the lawyer will have to ask for a certificate of no objection from the catastral office. It is customary to provide a 10% deposit at the time of offer to be placed in escrow.. If you will not be in Nicaragua at the time of closing a power of attorney can be granted to complete the transaction.
Completing the Sale
Once all terms of the sales contract are met the sale can be completed. An “escritura” is a legal document that completes the buying transaction. Once the remainder of the purchase funds are sent to the escrow account the buyer and seller sign this document. At this point you own the property. Congratulations but you are not quite done yet.
Registering the Property
Your attorney will now register the property in your name by 2 official government offices.
- Catastro: Mapping and land studies office
- DGI: Tax office. DGI may visit the property for a physical site evaluation to determine the property taxes.
Transfer Tax will be 1% to 7% of the assessed property value and is a one time tax. Value will be the purchase price or assessed price which ever is greater.
- 1% under $50 000 USD
- 2% under $100 000 USD
- 3% under $200 000 USD
- 4% over $200 000 USD
- 5% over $300 000 USD
- 6% over $400 000 USD
- 7% over $500 000 USD
Registration Tax – 1% (to a maximum of $1000 USD) of the assessed value and is a one time tax.
Municipal Tax – 1% of 80% of the value assessed by the city. This city tax is paid yearly. Assessed values are historically very low compared to DGI.
The legalization process can take between 2-6 months, depending on the different offices. But the moment you sign the sales contract you own the property.
Financing
Most buyers use a HELOC (Home Equity Line of Credit), second mortgage from a property in their home country or have sufficient liquid assets to complete a purchase. In some cases there is vendor financing available with a large down payment and payments spread over 5 years or less.