Last Updated:
Mar 12, 2007
Ex-banana republics can be hot tourist destinations. Honduras, for example.
Honduras has a bad reputation as one of the least developed and least secure countries in Latin America. There’s been a history of military power, corruption, inequality, crime, and natural disasters. It is an agricultural country sometimes labeled the “Original Banana Republic.”
Yet now it seems on the verge of tourist take-off. This was led by the Bay islands - Roatan, Utila and Guanaja - whose real-estate development started in 1991, and whose prices are at Caribbean levels. Now beach mania is spreading to the mainland.
Foreigners can freely buy properties in Honduras except for coastal areas which is permissible only under certain parameters.
Honduras has a bad reputation as one of the least developed and least secure countries in Latin America. There’s been a history of military power, corruption, inequality, crime, and natural disasters. It is an agricultural country sometimes labeled the “Original Banana Republic.”
Yet now it seems on the verge of tourist take-off. This was led by the Bay islands - Roatan, Utila and Guanaja - whose real-estate development started in 1991, and whose prices are at Caribbean levels. Now beach mania is spreading to the mainland.
Foreigners can freely buy properties in Honduras except for coastal areas which is permissible only under certain parameters.
Read Price History »
RENTAL YIELDS
Last Updated: Oct 29, 2005
A 100 sq. m. house along the a Bay island beach can earn very healthy yields of perhaps 35%. The figure is calculated for weekly rentals and an estimated 3 months vacancy each year. Yields for other sized properties range from 12% to 21%, with bigger places earning generally lower yields.Apartments in Honduras' capital and other major cities have much lower rental yields of around 4% to 6%; however, 300 sq. m. apartments might typically yield up to 8%. Houses in major cities' suburbs might typically yield from 6% to 8%.
TAXES AND COSTS
Last Updated: Feb 18, 2009
Effective Tax Rate on Rental Income |
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| Monthly Income | US$1,500 | US$6,000 | US$12,000 |
| Tax Rate | 4.4% | 3.1% | 5.1% |
| Click here to see a worked example | |||
Source: |
Disclaimer | ||
Rental Income: Net real estate rental income of non-residents is taxed at 10%.
Capital Gains: Capital gains earned by non-residents are taxed at a flat rate of 10%.
Inheritance: Inheritance is not taxed in Honduras.
Residents: Residents are taxed on their worldwide income at progressive rates, from 10% to 25%.
Capital Gains: Capital gains earned by non-residents are taxed at a flat rate of 10%.
Inheritance: Inheritance is not taxed in Honduras.
Residents: Residents are taxed on their worldwide income at progressive rates, from 10% to 25%.
BUYING GUIDE
Last Updated: Mar 12, 2007
The total round-trip transactions costs are around 9.65% to 11.65%, inclusive of the 5% real estate agent’s fee, which is paid by the seller. The total cost of registering property is around 6.65% of the property value. The registration process involves seven procedures and can be completed in about 36 days.
LANDLORD AND TENANT
Last Updated: Jul 12, 2007
Rent: The initial rents and rent increases are generally set freely by the parties. However, if the value of the property being rented is below US$2,000, it is the Rent Tribunal that sets the rent.Tenant Eviction: The eviction procedure and collection of unpaid rent can take a long time. The time period to resolve a lawsuit of eviction in the Tenancy Tribunal is unpredictable, due to the ineffective legal system - all channels available to the tenant are typically used to delay the trial.
ECONOMIC GROWTH
Last Updated: Mar 12, 2007
Honduras rising from the ashes?
In 1998, Honduras (pop. 7 million, GDP/Capita US$1,225) was devastated by Hurricane Mitch. At least 5,000 people were killed and 70% of the crops were destroyed. The damage, estimated at $3 billion, set development back by decades. Real GDP per capita is now back near its 1980 level.
The economy grew by about 4.2% in 2005 and 4.6% in 2004, and it is estimated that GDP will increase by 4.5% in 2006.
Honduran society is fractured by economic inequality. Money sent home by Hondurans working abroad is a key source of income. Malnutrition, poor housing and infant diseases are widespread. Poverty, and the prospects offered by drug trafficking, have contributed to a virulent crime wave, conducted by youth gangs known as “maras”.
The economy grew by about 4.2% in 2005 and 4.6% in 2004, and it is estimated that GDP will increase by 4.5% in 2006.Honduran society is fractured by economic inequality. Money sent home by Hondurans working abroad is a key source of income. Malnutrition, poor housing and infant diseases are widespread. Poverty, and the prospects offered by drug trafficking, have contributed to a virulent crime wave, conducted by youth gangs known as “maras”.
