Belizean Dream Or Nightmare: Navigating The Real Estate Market In Belize

Belize is a paradise like no other place on earth, with its turquoise waters, ancient Mayan ruins, and rice and beans. The Belize real estate market is hot, and there are many advantages to buying a house there. Firstly, Belize is one of the few countries in the world where foreigners enjoy the same rights as nationals in land ownership and tenure, and there is no capital gains tax. This means that if you purchase land and later sell it at a higher price, you pay no capital gains tax and all profits remain with you. Secondly, the property and housing costs in Belize are relatively low compared to other countries. You can buy raw land at prices not seen in the US since the 1960s, or find a simple rental house near the sea for under $200 a month. Thirdly, Belize offers a range of options for those looking for a peaceful and relaxing home, from luxurious beachside abodes to tidy cottages that are tucked away for privacy.

Beachfront vs inland property

There are several factors to consider when deciding between buying a beachfront or inland property in Belize. Both options offer unique advantages and it's important to weigh these before making a decision.

Beachfront properties in Belize offer stunning views of the Caribbean Sea and provide residents with the luxury of waking up to fresh sea breezes every morning. In addition to the breathtaking scenery, beachfront properties also come with a private stretch of beach and easy access to the water. For those seeking a more secluded lifestyle, there are beachfront homes that offer privacy and tranquility. On the other hand, for those who prefer a sense of community, there are condominium communities along the shoreline as well.

In contrast, inland properties in Belize place you directly in the heart of the country and its vibrant culture. Opting for an inland home increases your opportunities to interact with the locals and immerse yourself in their daily routines. Additionally, you'll find more convenient access to shopping and restaurants, which is especially advantageous considering that much of the traffic in Belize is on foot.

Another aspect to consider is the availability of properties. Both beachfront and inland properties are readily available in Belize, with a range of options to suit different preferences and budgets. Beachfront properties can vary from secluded homes to condominium communities, while inland properties can offer stand-alone houses or condominium living.

It's worth noting that the cost of properties in Belize can vary significantly. While you can find luxurious beachfront homes and condominiums, there are also more affordable options inland, including simple rental houses near the sea. Additionally, the cost of living in certain areas of Belize is remarkably low, with property taxes being extremely affordable.

Ultimately, the decision between beachfront and inland property depends on your personal preferences and lifestyle choices. If you prioritize stunning views, privacy, and easy access to the sea, then beachfront property might be ideal. On the other hand, if you're seeking more interaction with locals and convenient access to amenities, an inland property could be a better fit.

Personal residence or investment property

If you are considering buying a house in Belize, there are a few important things to keep in mind. Firstly, you should determine whether the house will be for your personal residence or an investment property. This decision will impact your focus and the factors you consider when choosing a property.

If you plan to move to Belize, whether for retirement or a change of lifestyle, your priorities will be different from those investing in a rental property. For a personal residence, you should explore the different regions of Belize to find an area that aligns with your desired lifestyle. For instance, if you want to be part of a vibrant community, San Pedro might be a good option. On the other hand, if you prefer a more secluded and tranquil environment, you might consider a private beach house. Additionally, consider how frequently you'll inhabit the property and the amount of time and effort you're willing to invest in maintenance.

On the other hand, if you're primarily interested in an investment property, you might consider the potential rental income and the demand for rentals in the area. Look into the possibility of hiring a property management company to handle the rental process when you're not in the country. This way, you can offset the costs of the property or even make a profit.

Another aspect to keep in mind is the type of property you want. Belize offers a range of options, from stand-alone houses to condominium communities. Condominiums in Belize tend to be modest two-to-four-storey buildings used by vacationing foreign residents. They offer the advantages of cooperative apartment living with the economic benefits of homeownership. If you're looking for a community feel and lower maintenance demands, a condominium could be a good choice. However, if you value privacy and having your own space, a stand-alone property might be more suitable.

Lastly, it's crucial to be aware of potential scams and exercise caution when dealing with real estate agents and attorneys. Always conduct thorough research, take your time, and consider consulting a licensed real estate agent or ethical attorney-at-law in Belize to guide you through the process.

Property taxes

Belize is considered a tax haven, allowing individuals and corporations to legally reduce their tax liabilities. While this means that there is no capital gains tax on property, there are still property taxes to be paid.

If you are renting out your property, you will need to pay a flat business tax on rental properties of 3% to the Belize Tax Services Department. This is payable on any monthly receipts from rent, royalties, premiums, or other receipts from real property that is BZ$800 or more.

If you are a US citizen or resident, you will also need to report your worldwide income to the Internal Revenue Service (IRS), even if your income is earned in Belize. However, you can get an inclusion to protect and shield up to US$108,700 of your income (as of 2021).

Belize has a territorial tax system, which means that you are only taxed on income earned within Belize. If you are a resident of Belize, you will generally need to file a tax return if you have taxable income that exceeds the annual threshold. Taxable income includes income from employment, business or self-employment, rental income, and investment income.

Belize has a flat income tax rate of 25% on taxable income. If you earn under BZ$26,000, you are exempt from income tax. There is also a value-added tax (VAT) of 12.5% when buying goods or services.

Local scams

Belize is a beautiful country with many attractions, but as with anywhere in the world, real estate scams do exist. Here are some common scams and advice on how to avoid them:

Fast-Talking Brokers and Attorneys

Be cautious of fast-talking real estate brokers, attorneys, or anyone making a high-pressure pitch. Take your time with any real estate transaction and do not be afraid to walk away. It is recommended to do all real estate transactions through a licensed Belize real estate agent or an ethical Belize attorney-at-law. Ensure that a Title Search is conducted at the Government Land Registry to confirm that the property is free and clear of all liens, judgments, and encumbrances.

Foreign Builders

Some foreign builders may persuade you to choose them over local Belizean builders. They will quote a cost per square inch by US standards and then get quotes from local builders for much less. However, you will still be charged the higher US price, plus any additional cost overruns. It is recommended to support local Belizean builders, who can build homes at a much lower rate and total cost.

Uncompleted Developments

Belize is a target for "developers" who start projects and convince buyers to pay for condos that remain uncompleted for years. These partially built structures with no infrastructure may be marketed with enticing "renderings" of the proposed finished resort, but it is best to avoid investing in properties that are not yet built.

Misleading Marketing

Some developers may make misleading claims about the amenities and completion timeline of their developments. For example, in the case of the Sanctuary Belize scam, consumers were duped into buying lots with false promises of luxury amenities and quick completion times. Be sure to do your due diligence and research everything about the development, looking for reviews and joining local Facebook groups to ask for advice.

Contractual Wording

Be cautious of contracts with wording that threatens a lawsuit if you make any derogatory statements against the builder or development. This is a clear sign that something may be wrong. Always have a Belizean attorney review any contracts before signing.

Remember, if it looks and sounds too good to be true, it probably is!

The legal process of transferring ownership

Negotiating the Terms

In the event of a sale, the buyer and seller must agree on the terms of the transfer, including the purchase price, payment terms, and any conditions or contingencies.

Preparing Transfer Documents

This step involves preparing the necessary documents, such as a transfer of title document, a deed of conveyance, a land survey, proof of payment of property taxes, and verification of a title search. The title search can be conducted through a local attorney, typically costing no more than US$250.

Executing Transfer Documents

The buyer and seller must sign the transfer documents in the presence of a witness, who also signs the documents. It is recommended to have an attorney review the documents to ensure their legality and compliance with relevant laws.

Registering the Transfer

The transfer documents must be submitted to the Belize Land Registry for registration and review. Once the transfer is registered, the buyer becomes the new landowner and is responsible for paying property taxes, maintaining the property, and complying with legal requirements related to land ownership in Belize.

Understanding Land Types

Belize has two types of land: Undeclared Land and Declared Land. Transfers for Undeclared Land are recorded at the Titles Registry, while transfers for Declared Lands are registered at the Land Registry. Both offices are located in Belmopan, Cayo District.

Acquiring Property through Settlement

According to the Law of Property Act, individuals can acquire property rights if they have settled on a land for more than 30 years and have continuous undisturbed possession of that land. If the Supreme Court finds that possession is established, they may issue a declaration of Title to the claimant.

Understanding Title Ownership

Property purchasers can take title to freehold property in Belize in three ways: Deed of Conveyance, Transfer of Certificate, and Land Certificate. A Deed of Conveyance is the oldest form and represents a registered right to ownership. A Transfer Certificate of Title is a physical title to a specific parcel of land and is considered more secure. A Land Certificate is an absolute title for property purchases in new or specially designated areas.

Engaging a Real Estate Agent or Attorney

It is recommended to use a licensed Belize real estate agent or an ethical Belize attorney-at-law for land transactions. They can assist in negotiating, preparing documents, and ensuring compliance with legal requirements.

Understanding Costs and Taxes

There are basic minimum costs associated with property transfers in Belize, including Stamp Duty, Recording or Registration Fees, Property Taxes, and Real Estate Company Expenses. The purchaser is responsible for most of these costs, while the seller incurs the property taxes. Additionally, there is a 5% government stamp duty on the declared purchase price of the property at the time of the title transfer.

Frequently asked questions