How does the real estate purchase process work?
Purchasing property in Nicaragua works very much like anywhere else in the world. First of all, you write a Contract to Purchase for the property you wish to purchase. A deposit, usually sent via money wire to an escrow account where it is held until closing, generally accompanies this Contract to Purchase. Closing takes place in an attorney's office where the Deed is conveyed and the final purchase monies are distributed between the Buyer and Seller and the transaction is completed. Some wish to come back to Nicaragua for the closing but others will assign a Specific Power of Attorney to a person (often a real estate broker) to complete the closing process on their behalf. Closing generally takes place 30 to 60 days from the date the Contract to Purchase is issued. Real estate transactions in Nicaragua are much like elsewhere in Central America, there is often no financing involved so closings are easy. Once closing has taken place, the purchaser owns the property and possession is granted.
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What is the legal basis for owning property in Nicaragua?
The vast majority of property for sale in Nicaragua has a fee simple (freehold) title. There is leasehold property for sale, although this makes up a very small proportion of total sales of real estate in the country.
The most straightforward way to own property in Nicaragua is in your own name. It is also a simple process to hold the property in the name of a Nicaraguan corporation and many Nicaraguan law firms have ready shelf corporations for sale to make this process an efficient one. You can also hold property under a foreign corporation (the most common vehicles being a US or Panamanian corporation) although the legal process to do this will take a little longer.
Can I get title insurance for property purchases in Nicaragua?
Yes, from First American Title Insurance. First American has been operating here for the greatest length of time. Title insurance policies are paid for in the US and any claims are made to the company in the US. If you are taking out title insurance you will need to use an attorney approved by your Title Insurance Company. Obtaining title insurance is not a requirement for purchasing property in Nicaragua although, it is highly recommended.
Do I have to be present at the closing?
Yes, you do need to be present at the closing if you have not prepared a Power of Attorney. The Power of Attorney enables you to complete the purchase of your property without having to be in Nicaragua. The Power of Attorney can be given to your attorney, a representative of Coldwell Banker Nicaragua Real Estate or to any individual, living in Nicaragua, whom you would like to represent you.
What are the typical closing costs for a real estate transaction in Nicaragua?
Typical closing costs for a real estate transaction are set out below. In some cases these can be negotiated with the seller. It makes sense to calculate the closing costs based on the full purchase price of the property despite the fact that, in practice, the property may be valued by the Catastral Office at less than the actual purchase price. As this 'assessed value' will not be known until after closing, the transfer tax and registration fee are normally calculated on the full purchase price to be on the safe side and any extra refunded to the buyer once the registration process has been completed.
Also, the exact fees and costs charged by your lawyer will vary depending on the lawyer you have chosen, the type and location of property, the terms and conditions of the sale and whether or not you wish to take out title insurance. A general guide to fees and costs is provided below to give you an indication the range of services and associated fees.
Transfer tax: 1%
Registration tax: 0.55% (capped at $350 for commercial property)
IMI tax (for purchases in San Juan del Sur): 1%
Registration administration fee: $100
Preparation of Power of Attorney: $75
Legal due diligence: between 1% and 1.5%
Application for First American Title Insurance (where applicable): between $500-1500
Survey of (residential) property (where needed): $50-300
What property taxes do I have to pay?
Once you own your property you will be responsible for yearly property taxes (the I.B.I or Impuestos de Bienes Inmuebles). This is paid to the local municipality. The amount is 1% of the assessed value given to your property by the Cadastral Office. The assessed value of the property is set each year and will be amended following any improvements made. Taxes are paid in arrears each year by March 31. If paid before March 31 certain discounts may apply. Assessed values tend to be in the region of 30-60% of market value.
Why is it a good idea to set up a corporation?
When you acquire a real estate property in Nicaragua with personal title, you pay transmission tax that is equal to one percent (1%) of the evaluation made by the cadastre; however, when you acquire a corporation that owns property you only have to transfer shares without having to pay transmission taxes when you want to transfer a property that belongs to the corporation. However, if the corporation has a minimum of US $150,000.00 they will have to pay 1% annually just for having this amount despite the fact you don’t have any income
.If the corporation that acquires real estate will only be acquiring it to own the property, the process of transmission will become simpler since you don’t have to register the property again and all you do is transfer shares. The transferred shares are private acts between particulars where the tax office has no business whatsoever. However, if the corporation acquires various properties under its name, it would have to open its accounting and declare it incomes to the tax office. It should be said that even if the corporation has no activity it should be registered in the tax office and still declare its incomes as ZERO (0).
How many acres in a manzana?
1 manzana = 1.73 acres
1 acre = 4,049 square meters
1 square meter = 10.76 square feet
1 square foot = 0.093 square meters
1 meter = 3.28 feet
1 foot = 0.304 meter
1 manzana = 10,000 square varas
1 square vara = 0.70 square meters.
How do you get to Nicaragua? Are there daily flights
Traveling to Nicaragua has never been easier! Flight times are approximately 3 hours from Miami, 2 hours from Houston, 4.5 hours from Los Angeles and 3 hours from Atlanta, which are the major connection cities. Major airline carriers depart from the USA, Canada, Europe and all over the world every day. Most International flights arrive in Managua (MGA), the capitol of Nicaragua. Delta Airlines, American Airlines, TACA and Continental are the major carriers used by those residing in the States. Flights are moderately priced if they are purchased in advance and flight times are very convenient for connections and arrival times. The Managua International airport has undergone over US $50 Million in major renovations and updates and is a beautiful and very accommodating airport with all of the expected amenities and services.
Is it expensive to vacation or retire in Nicaragua? What are living costs like in Nicaragua?
Good news! The costs to live very well in Nicaragua are much lower than many places in the world. Many things used in your daily lives are priced much lower. Many people find that they can enjoy a lifestyle better than they ever imagined for much lower than they ever expected. This is especially favorable for retirees or those wishing to live with less debt. People on a fixed income can make their money go much further and have much lower living expenses than in the USA, Europe or Canada. These lower costs are across the board as well, health care is dependable and inexpensive, restaurants are incredibly priced, energy costs are lower and home costs are much lower. Retirees can reside in Nicaragua with special tax incentives to give them even more value for their money. Nicaragua is a great place to live!
Is it safe, I have heard there was a civil war? I have heard Nicaragua is a communist country?
YES, NICARAGUA IS VERY SAFE! Nicaragua is one of the safest, if not the safest, country in all of the Americas and NO; it is not a communist country! We are not saying this, world regulatory agencies are. Nicaragua has the lowest violent crime rate in the Americas. Recent reports show a rating of 3.7 per 100,000 for crime rating compared to 8.7 per 100,000 for the United States. We have been in Nicaragua for many years and so have our friends and family and there has never been an issue of violence that we have witnessed or even heard of. Nicaraguans are peaceful people who want to enjoy life just as those elsewhere in the world want to. Nicaragua has gotten bad press in the past but that image is quickly being changed. The civil war ended nearly 20 years ago and Nicaragua has had democratic elections ever since, 80% of the registered voters participated in the last election, that is a strong sign of what the country wants for their future, democracy and peace.
