Belize Property Purchases: Navigating Financial Security

Is it monetarily safe to buy property in Belize?

Belize is an emerging player in the overseas property market, with a growing economy, new tax incentives, and favourable conditions for foreign investors. The country offers a range of benefits for homebuyers, including tax advantages, a simple buying process, and affordable property prices. However, there are also risks to consider, such as scams, substandard construction, and natural disasters.

Advantages of Buying Property in Belize

Belize offers a unique set of advantages for foreign investors looking to purchase property. Here are some key benefits:

- Foreigners can buy property freely in Belize, and there are no restrictions on non-citizens owning property.

- There is no capital gains tax, which means higher profits if you resell your property.

- The country has a conducive business environment and a British Common Law system, making it ideal for American investors.

- Belize offers lower property taxes compared to the US, typically ranging from 1% to 1.5% of the property's value.

- The buying process is relatively simple and loosely regulated, with no requirement for foreigners to be present in the country to complete the sale.

- As a former UK colony, Belize has English as its official language, eliminating language barriers in the buying process.

- The country's growing tourism industry and digital nomad visa present opportunities for vacation rental income.

- Property prices in Belize are generally more affordable than in the US, making it an attractive option for those seeking a lower cost of living.

Disadvantages and Risks of Buying Property in Belize

While Belize offers many advantages, there are also several risks and challenges to consider:

- Scams and fraudulent activities are prevalent in the country's real estate market, including title fraud, escrow fraud, and deceptive sellers.

- The lack of licensing and regulation for real estate agents and escrow companies can make it challenging to find trustworthy professionals.

- Hurricanes and flooding are common natural disasters in Belize, impacting property values, insurance premiums, and infrastructure.

- Construction standards in Belize may not meet the same level as in the US, requiring careful inspections before purchasing.

- Squatting is a concern, especially for foreign investors who may not regularly visit their properties.

- Some areas of Belize, such as Belize City and Belmopan, have higher crime rates and should be approached with caution when considering property purchases.

In conclusion, while Belize offers numerous monetary advantages for foreign property buyers, it is essential to carefully consider the risks and challenges. Conducting thorough due diligence, seeking professional help, and being cautious in your dealings can help mitigate these risks and make your investment in Belize a safe and rewarding one.

Foreigners' rights

Belize is one of the few countries in the world where foreigners enjoy the same rights as nationals in land ownership and tenure. There are no restrictions on foreign buyers owning land in Belize, and they enjoy the same rights as Belizean citizens. Foreigners have full foreign ownership and can purchase property without worrying about capital gains taxes.

In Belize, a foreigner has the exact same ownership rights as a local. A person does not require citizenship or residency to own property in Belize. The ownership rights and structure are the major draws of owning land in the country. As long as you have the capital or funds for the property, you are able to purchase land. You also have full control of the property and, unless there are restrictive covenants in place, you are able to build what you want when you want.

Belize is one of the most pro-foreign direct investment countries in the Caribbean and Central America region. It is exceedingly and almost unbelievably easy to buy land in Belize. It is also very common and advisable to buy land in Belize through a corporation or company. Many of the land purchases are done with a company or corporation, and there are various reasons and benefits for this, including tax advantages.

It is also not necessary to be in Belize to buy land. Most real estate and land transactions are done remotely, and the buyer does not have to be physically present in the country to purchase property.

Tax benefits

Belize is one of the few countries in the world where foreigners enjoy the same rights as nationals when it comes to land ownership and tenure. This includes the right to own beachfront property.

One of the biggest tax benefits of investing in Belize real estate is that there is no capital gains tax. This means that if you sell a property for a profit, you won't have to pay any tax on the profit to the Belizean government.

Property taxes in Belize are also very affordable. Property taxes vary depending on the location and type of property but are generally between 1% and 1.5% of the value of undeveloped land. In rural areas, property taxes can be extremely low. For example, a mansion in the village of Succotz pays an annual property tax of just $8.

For US citizens, another benefit of investing in Belizean real estate is that you can pay zero income tax in the US on your rental profits. Your effective tax rate on rental profits in Belize will be about 3%, and many people choose to simply pay this rate on their gross income without bothering to file a tax return.

Additionally, if you are a retiree over the age of 45, you can import your possessions to Belize duty-free.

Scams and fraud

Belize is a desirable place to buy property, with its beautiful beaches and attractive tax benefits. However, it is also a place where scams and fraud are prevalent. Here are some common scams and how to avoid them:

The Sanctuary Bay/Belize Scam

The Sanctuary Bay/Belize Scam is one of the biggest real estate scams in the country's history. The Federal Trade Commission (FTC) took action in 2018 to shut down this scam, which cost customers a massive 100 million USD. The scam involved a large "development" with an ever-changing name, including Sanctuary Bay, Sanctuary Belize, and The Reserve. Developers and salespeople used a prepared script to lure millions of dollars from investors and retirees seeking a dream life in the Caribbean. They promised a secure environment with homes, condos, restaurants, marinas, hospitals, and more. However, those who fell for the scam received nothing in return.

Under-developed Properties

For years, people have reported developers luring buyers to pay for under-developed properties that never get finished or take decades to complete. These developers use high-pressure sales tactics and make false promises about the completion dates and amenities of the properties.

Small-scale Scammers

Small-scale scammers, such as foreign builders, may persuade buyers to choose them over local builders. They will quote a higher price per square inch by US standards and then get quotes from local builders for much less. However, the buyer will still end up paying the higher US price, plus any cost overruns.

Faulty Titles

Another common scam in Belize involves faulty titles. Unsuspecting individuals purchase the title of real estate in Belize, only to find out later that the title is fraudulent. To avoid this scam, it is crucial to hire an expert to conduct an extensive title search and ensure the legitimacy of the property.

Unlicensed Brokers/Agents

Real estate agents in Belize are not licensed by law, and there is no broker supervision or threat of lawsuits for buyers. Anyone, including taxi drivers, can legally sell you real estate and demand commissions. To avoid this issue, it is recommended to hire an attorney who can help with the title history and ensure that the property has a clean title.

Escrow Companies

Belize does not license official escrow companies, so there is a risk of encountering a fraudulent company or agent. To avoid this, it is advisable to seek the services of a qualified real estate attorney who can help set up and manage the escrow process securely.

To summarise, while Belize offers many benefits for property buyers, it is essential to be cautious and conduct thorough due diligence to avoid falling victim to scams and fraud.

Natural disasters

Belize is highly susceptible to natural disasters such as hurricanes, tropical storms, flooding, and drought, which affect the country regularly. The hurricane season in Belize is from June to November, and the country has experienced 16 hurricanes since 1930, eight of which were major hurricanes. In addition to hurricanes, Belize has also been impacted by several tropical storms and depressions during this period. These weather events can cause extensive flooding and damage to infrastructure and the agricultural sector, particularly during the hurricane season.

One of the deadliest hurricanes in Belize's history was in 1931, known as Storm Five, which made landfall in Belize City and resulted in approximately 2,500 fatalities. Another notable hurricane, Hurricane Hattie in 1961, led to the relocation of the capital city from Belize City to Belmopan due to safety concerns. More recently, in 2001, Tropical Storm Chantal caused moderate rainfall and infrastructure damage throughout Belize, with total losses estimated at $4 million. In 2010, Hurricane Richard caused significant damage to homes, agriculture, and infrastructure, with initial damage estimates at $49.2 million.

When considering purchasing property in Belize, it is essential to be aware of the risks associated with natural disasters, especially in areas prone to flooding or those located along the coast, which are more vulnerable to hurricanes and tropical storms. Conducting thorough due diligence and seeking professional advice from local experts can help mitigate these risks and ensure a more informed decision-making process.

Squatting

In Belize, a squatter can only claim title to a land or easement by proving to the Supreme Court of Belize that they have had continuous and undisturbed possession of a property for 30 years on National and Conveyed lands and for 12 years on registered lands. As long as you have the title and can show ownership, your Belize real estate investment will be safe and secure.

To avoid squatters, it is recommended that you take measures to prevent squatting, damage, vandalism, or theft from the outset. This is especially important if you are living abroad and cannot regularly check on your property. Regular site inspections are an invaluable step in the fight against squatters.

Frequently asked questions