Frequently Asked Questions

There are two main companies offering Title Insurance in Nicaragua - First American Title Insurance Company and Stuart Title.

Title insurance provides similar protection to that available in the United States and Canada.

If you choose to purchase title insurance you will need to use a lawyer approved by your title insurance company. Obtaining title insurance is not a requirement for purchasing property in Nicaragua although it is recommended.

I would be happy to provide you with the contact information of approved lawyers.

The climate in Nicaragua does not vary greatly and is largely a function of elevation. In the coastal areas and to an elevation of 2,460 feet the daytime temperatures average 85°F to 91°F, (29-33 C)and night temperatures range from 69°F to 75°F (21-23 C). The central highlands of Nicaragua, which range in elevation from 2,460-5,250 feet have daytime temperatures ranging from 75°F to 80°F (23-25 C) and nights can fall as low as 59° F (15 C). The highest peaks of the central highlands are even cooler.

The mid and southern Pacific coast enjoys regular off shore breezes which makes the climate very pleasant despite the heat.

Rainfall is seasonal. The wettest months are May through to November with October being the rainiest and the driest months are December to April. The Western side of the country generally drier and less subject to flooding and hurricanes.

If you purchase property in a planned development, the real estate lawyer has already likely been selected by the developer. This is done to simplify the closing process, ensure deed consistency and reduce costs. If you decide to purchase property within a planned development, and wish to have a property title search performed, you should retain a different lawyer.

Yes, foreigners can open a bank account with a Nicaraguan bank for checking or savings and in either US dollars or local currency. You will need two letters of reference from individuals with Nicaraguan residency plus a letter of good standing from your home country bank.

It is not necessary for you to be in Nicaragua on the day of closing of your real estate transaction. If you don’t expect to be in Nicaragua on the day of closing, you will need to make sure that a valid Power of Attorney (POA) is in place which allows your representative to sign on your behalf. A POA must be notarized by a licensed Nicaraguan lawyer.

High speed Internet access has been available in Nicaragua's larger cities for several years. It is now available in San Juan del Sur and the Tola beaches. A variety of service providers (phone, cable, wireless)are already operating along the coast and offer enough bandwidth to support IP telephony such as Vonage and Skype. In general, internet service is relatively reliable in Nicaragua.

Annual Nicaragua property taxes are 1% of the assessed value of the property. In many planned developments, values are assessed annually on a per meter basis. Therefore,your land is worth the assessed square meter value for your specific planned development multiplied by the number of square meters you own. Land outside of planned developments is also assessed annually. In most cases the assessed property value for tax purposes is lower than the purchase price of your property.

Your property taxes are due by March 31st and are payable in the municipality in which your property is located.

You should expect to pay approximately 4% of the purchase price in closing costs. The exact amount will depend on what is negotiated in the purchase and sale agreement and will depend on where the property is located in Nicaragua. An approximate summary of typical closing costs for a Nicaragua real estate transaction is as follows:

a. Land Transfer Tax (1% of purchase price or cadastral value which ever is higher)

b. IMI Tax (1% of purchase price or cadastral value which ever is higher)
Please note: IMI tax is a municipal revenue tax and is really the responsibility of the seller, however, the responsibility of the IMI tax is typically negotiated between the buyer and seller. The IMI tax is currently only charged in certain municipalities (i.e. San Juan del Sur)

c. Lawyers fees are generally 1% of the purchase price (typically with a minimum of $500). This fee percentage is negotiable for larger purchases (ie. over $200K).

d. Title Registration Taxes and Fees. These costs are generally 1% for purchases under $100K, and otherwise vary.

Yes, you can own Nicaraguan real estate in your own name. You can also own property in the name of a Nicaraguan corporation, or in the name of a foreign corporation. Owning Nicaraguan property in your own name is by far the easiest option. Owning in the name of a Nicaraguan corporation is common,however, it requires the creation of Nicaraguan corporation with a minimum of two shareholders.

In order to attract and further promote the economic advantages of tourism, Nicaragua enacted a tax incentive law in 1999. This law was made in an attempt to boost foreign and local investment in the tourism sector. Under this law, generous tax breaks have been offered to a number of tourism related businesses. These include, but are not limited to:

* Hotels, condo-hotels, B&Bs
* Eco-tourism operators
* Air and water transportation services
* Car Rentals
* Boat rentals and recreational vehicle rentals

Since the proclamation of Law 306, Nicaragua’s tourism industry has really matured and is now capable of serving a broad range of travel tastes.

An increasing number small businesses, both foreign and local, have found success with this regime. Examples of businesses taking advantage of the Law 306 tax advantages are:

* Small hotels, B&Bs, hostel operators
* Day Trip Tour Companies
* Fishing Charters

In recent years, a number of real estate developments have used the Law 306 tax incentives in the form of condo-hotel offerings. The developer is able to take advantage of not paying sales tax or import taxes on select items required to build the condo-hotel and its related amenities. The owner of a condo unit in a Law 306 approved condo-hotel, is also able to benefit from generous tax incentives. These incentives include:

* a waiver of the land transfer tax on the purchase of your property (1% of the purchase price),
* an exemption from having to pay property tax on your property for 10 years; and
* an exemption from having to pay income tax on rental income earned from this property for 10 years.

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