A Guide For Foreigners Thinking Of Buying Real Estate In Guatemala
That feeling of knowing that one is comfortable in a place, a business, a personal relationship, school, pleasure, or an intention to invest… There are various reasons why one can decide to purchase real estate property. And when this place is in a foreign country, questions and doubts can follow such a decision.
Can Foreigners Buy Real Estate in Guatemala?
Foreigners can purchase property in Guatemala: taxes, conditions, and rights are the same for Guatemalans, foreigners, residents, and non-residents. The advice of a reputable real estate agent is more than advisable. Unless the seller is a family member or a friend, the involvement of a knowledgeable agent is indispensable. It is important to choose your realtor carefully as there is no certification system or MLS in Guatemala. The realtor oversees managing the offer and counter offer and assists during the purchase process.
The advice of a good notary is also indispensable
The advice of a good notary is also indispensable. It is a notary who draws up the agreement in writing and ensures that the seller receives the funds according to the agreement. The notary also ensures that the buyer gets a clear/clean title and possession of the property. In Guatemala, lawyers have both titles: attorney and notary, which can be confusing, and I personally believe that this practice should cease.
In my experience, if there isn’t a realtor dealing with the sale (or not a very competent one), it would help if both the buyer and seller take the advice of separate notaries, who would work in collaboration. But if there is a good realtor dealing with the sale, who takes care of the commercial side of the transaction then one notary could represent both parties. The buyer pays the fees of the notary and, for that reason, gets to choose who this will be. If the seller needs extra assistance and advice, translation, or extra meetings for the seller to understand the steps of the transaction, an agreement regarding the fees can be made.
Anyone who purchases property needs to have an NIT (tax identification number). The decision of whether to purchase individually or to set up a corporation (S.A.- Sociedad Anónima) depends on the particular situation of each person or family. It is possible to obtain a loan from a bank. Sometimes the buyer can receive financing from the seller in which case it would be advisable for each party to have separate notarial representation. If any of the signatories do not speak Spanish, a sworn translator must assist and sign documents to witness that they have read the documents to their client in their spoken language. If either the buyer or seller is outside Guatemala and unable to sign the documents, they must grant a power of attorney to represent them.
And About Taxes
And about taxes… I compare the question: “How much is the cost of purchasing property in Guatemala?” with this question asked to a doctor without bringing the patient: “How much does it cost to heal a patient?” Any responsible notary or realtor will not answer this question, and will only explain the cost, or possible costs, after having studied the specific property. The reason for this is that the assessed values (fiscal values) of properties have been incredibly low, uneven, and unfair. There are historical reasons… and our governments have not succeeded in achieving an organized system, an adjustment in the rates, or an incentive for people to present the most truthful appraisals. Buyers pay a transfer tax (that can go from 3% to 12% depending on the history of the property), and sellers pay a capital gain tax; these rates are calculated on the assessed values, and the flaws of the system have permitted that very similar properties pay very different taxes. A good legal advisor is important, as is the conscience of understanding how important taxes are for the country, and how important it is to keep decisions within a fair and legally safe structure.
This country, and Antigua especially, has been enriched by the visit of foreigners and honored by their decision to make it a home. The cultural interchange has been a source of learning and growth. Laws and rules vary, and it is true that foreigners do have to adjust to the local ways, which I understand may not always be easy. But I have happily witnessed how it always works out.
Written by Manuela Rosales (English speaking lawyer and notary)
Address: 1a Calle Poniente #1, Antigua Guatemala
Tel: +502 7832-1802
Email: [email protected]
One of the first questions that potential real estate in Antigua Guatemala clients ask me is whether foreigners can buy real estate. Well, this article certainly answered that question. Another question that is then asked is whether you should buy real estate in Antigua Guatemala through an LLC (SA).
