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Today’s Nicaragua: Opportunities for Retirement and Investment Abound

For many years, the stigma of war and  unrest kept tourists and investors away from the largest country in Central America. Things have changed and it is time to experience the new Nicaragua.

The very best way is to take the plunge and buy a ticket and visit. A former HAR International Advisory Group member, Magda Vandenbussche and I did just that a few years ago. We traveled by land on a public bus from San Jose, Costa Rica to Managua. When we arrived, we found a safe, charming and beautiful country with friendly people and vibrant scenery. After our stay, we decided to try and dispel some of the myths that we ourselves had before the trip.

Nicaragua is following in the footsteps of its neighbor Costa Rica as a viable retirement and investment destination. As the country’s turbulent history fades into the past, tourists are finding their way to the lovely tropical landscapes, volcanoes, and sandy beaches. Baby boomers are looking for their special place in the sun. Last year, more than one million tourists traveled there. With soaring real estate prices in neighboring countries, it’s not difficult to imagine that everything is changing in this tropical paradise.

 Forbes Magazine recently named Nicaragua as “an exotic Florida on the cheap” and considered it in the Top-Five possible destinations for Americans to retire because it offers  450 miles of coastline, charming Spanish colonial towns, a cost of living up to 60% less than in the U.S. and a good reputation for safety.

The capital Managua has more than 1.6 million residents and has been the epicenter of the country’s ill reputation. This city has endured a bashing by both man and nature. Over the years, between civil wars, fires and earthquakes, more than 600 city blocks have been destroyed. Instead of rebuilding the inner-city, the city has expanded to main corridors resembling similar growth in U.S. cities. There are modern buildings, large store fronts, restaurants, urban housing and shopping centers. In fact, the city of Managua is fast connecting to the second largest city of Granada.

The Nicaraguan people are affectionately called “Nicas.” Although they have been plagued by disaster for so many years, they have learned to be strong in spite of their conditions and have rebuilt and reorganized and managed to carry on with resilience.

Now Nicaragua has the potential to be one of the hottest destinations south of the border. Already many foreign buyers are taking advantage of this attractive opportunity. Here are a few of the reasons:

Cost of Living is more affordable

Real estate prices are still much lower than the neighboring countries of Costa Rica and Panama. The cost of living for most Americans is about 50% less. As baby boomers are reaching retirement, they are looking for viable options for relocating to warmer climates with less overhead.

New Laws for Foreign Investors

The Foreign Investor Law #344 gives foreign investors the same rights as local investors. There is no requirement to have a local partner. There is no limitation on ownership and there are attractive incentives for bringing foreign capital. The only limitations except for oceanfront land within 50 meters of the coast.

Incentives for Retirees

Law #694 establishes rules and procedures for people living as resident pensioners or retirees. This gives foreigners with pensions of more than $600,  or monthly dividends of $750. These individuals are classified as “Special Tourists” and can bring family members for an additional $150 per month. The ability to import up to $20,000 in household goods and bring in a vehicle duty free (must be no more than seven years old). A one-time tax exemption of $50,000 on building materials.

Tourism Tax Incentive Law

Nicaragua Law #306 was passed to welcome and attract tourism and real estate developers. It is one of the most pro-tourism laws in Latin America. Under certain qualifications, the business pays no income or real estate tax for up to 10 years. There are exemptions on taxes on and sales tax on products purchased for tourist projects and transfer taxes. The procedure for buying and registering land in Nicaragua is as follows:

  • Work with a knowledgeable local property specialist. Make an agreement as to the cost of their services before the working relationship begins.
  •  Find out if the property changed hands in 1980, as that is the year that several properties were illegally confiscated.
  • When you find a property of interest, have an attorney check the preliminary title (escritura de propiedad) and the deed (certificado registral) and be sure that there are no liens (libertad de gravamen).
  • It is recommended that you conduct an independent title search with a reputable title company operating there.

After all due diligence is completed, a notary will prepare a sales agreement and the attorney will register the property in the Registro Publico.

Hope to see you in Nica!

Judith Snively JD, CIPS, is the broker-owner of International Home Brokerage, the immediate past chair of the HAR International Advisory Group and a licensed attorney.

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