Buy Properties for Sale in Honduras

Tax and Offshore Investment in Honduras

Tax regimes vary greatly throughout Latin America. While some countries are investor friendly, others are not so open. There are several benefits (i.e. retirement programmes, tax discounts) but also some tax obligations. In this section we provide an analysis of the different tax structure in each country where January First Real Estate lists properties. This information may be very important for you to choose you retirement destination or where to invest. Keep in mind that there are related visa and residence issues which are discussed in Visa/Residence Requirements. In case you need more information or have doubts on any of these issues, the specialised staff in January First Real Estate will be glad to answer all your questions, click here.

Real estate assets are, without doubts, one of the most secure and profitable ways of investment. There are two main reasons for this:

1. Properties always tend to increase their value in the long term.
2. They generate an income for their exploitation (rental/yields).

Taxes and Costs in Honduras

Effective Tax Rate On Rental Income
Monthly Income
US$1,500: 4.4%
US$6,000: 3.1%
US$12,000: 5.1%

Income Tax
For nonresidents of Honduras, and foreign owned companies (except those located inside the Free Zones and Industrial Processing Zones) income tax is levied on net income. Taxable income is computed by deducting costs incurred and depreciation expense (capital allowance) from the gross income. Real estate rentals are taxed at 10%.

Real Estate Property Tax (Impuesto sobre bienes inmuebles)
Honduras collects annual property taxes based on the Ley de Municipalidades (Law of Municipality). The tax rates are levied on the property’s declared value and vary depending on the municipality. In the capital Tegucigalpa, the rate is 5% for properties located in the Central District. It is from 0.1% to 0.8% for properties in the San Pedro Sula, and 0.15% for urban properties located in other areas.

Capital Gains Tax
Capital gains earned by nonresidents from selling real property located in Honduras are taxed at a fixed rate of 10%. The taxable gain is the gross selling price less acquisition costs and improvement costs.

Living There
Income tax is payable on income obtained by all persons and entities (except companies located in Export Processing Zones or Free Trade Zones). Unlike nonresident individuals, residents are entitled to personal allowances and tax credits.
The tax bands (updated every five years) are as follows (2002):

Income tax
Taxable Income HNL (US$) / Marginal Tax Rate
Up to 70,000 (US$3,561) / nil
70,000 – 100,000 (US$5,087) / 10% on band over US$3,561
100,000 – 200,000 (US$10,174) / 15% on band over US$5,087
200,000 – 500,000 (US$25,436) / 20% on band over US$10,174
Over 500,000 (US$25,436+) / 25% on band over US$25,436

Allowances
Residents can deduct the following allowances from their gross income:

• Payments for education costs and fees paid to doctors: maximum of HNL20,000 (US$1,017) annually
  
• Payments for professional services other than those indicated above: maximum of HNL5,000 (US$254)
  
• Gifts made to the state and legally recognized institutions
  
• Medicines and medication of the elderly, retired, and/or disabled individuals: maximum of HNL10,000 (US$509)
  

The Tourism Promotion Law grants several benefits for retirees interested in residing in Honduras, including duty-free entry of a car and home appliances. Retirement income not derived from Honduran sources is exempt from taxes.
To become eligible for these benefits, retirees must submit an application, through a Honduran attorney, to the Ministry of Tourism. Beneficiaries must bring into Honduras, through the national commercial banking system, a minimum of US$600 per month. Non-retired persons must bring in a minimum of US$1,000 per month.

Honduras, make your dream investment come true.