When a foreigner purchases real estate in Belize, the purchase is subject to what’s referred to as a stamp tax upon close of escrow. Essentially, a stamp tax is the same as a transfer tax in the United States. In Belize, the stamp tax is 8%.
Stamp taxes are nothing new in the world. Many countries including Australia, Hong Kong, Singapore, Sweden, Netherlands, Denmark and the United Kingdom charge a stamp tax on the purchase of real estate.
Belize, which follows British Common Law, comes by their stamp tax honestly. It’s been around in England since 1694. It wasn’t just for real estate either. The original stamp tax was created as a paid duty on legal instruments such as cheques, receipts, military commissions, marriage licenses and land transactions. The reason it was called a stamp tax was because after it was paid, a stamp had to be attached or impressed upon the document to denote the duty had been paid.
During the early 18th century, the duty was extended to not only covering legal documents, but also the paper they were printed on. This included things like playing cards, atlases, newspapers and advertisements. Later in the century the tax was broadened even further to include medicines, certain toiletries, gold and silver plate and attorney’s licenses.
Belize’s stamp tax used to be 5% until November of last year when the government raised it to 8%. The hike was instituted as an attempt to recover a deficit of 400 million in unpaid transfer taxes by foreigners.
Many feared that 8% would be too steep and might stall the booming real estate market in the country.
Yet consider this: There are no capital gains taxes in Belize. Though you must pay a tax to get into the property, there are no taxes dues when you sell. This is not the case in North American countries where there is not only a transfer tax due on close, but the capital gains can be significant. With Belize real estate prices rising steadily each year, a sale of property down the road for appreciation is a very real and viable financial opportunity.
So relax about the tax.
Real estate in Belize is still the best deal in the Caribbean.
Brett Renee Stone is a managing partner and director of communications for Palm Reef Resort.