Retiring in Honduras
We would like to tempt you with the idea of retiring to this beautiful Caribbean island. Roatan offers an attractive retirement haven: beautiful terrain, temperate climate, International Airport, friendly people, and most importantly, a very low cost of living. Unquestionably, the overall cost of living in this country is more than affordable. A visit to the doctor is about $15.00 and pharmaceutical drugs cost 50% to 75% less than in the United States.
Keep in mind that Roatan,
the most developed of the Bay Islands, is far from cosmopolitan. There
is no cinema, the handful of restaurants are mainly located in hotels
and with the exception of the archeology-oriented Roatan Museum, there
are few cultural institutions to be found. If you want to make
the jaunt to the big city, you can fly to the mainland for as little
a $50 to $100 round trip or take a passenger ferry for about $18.
Foreign residents living on their foreign income, including pensions, are not subject to income taxes on their foreign income regardless of the amount of the income. Only the income earned in this country of Honduras will be taxed by Honduras. You are exempt in the U.S. from paying income tax on the first $75,000 per person of earned income in a foreign country. Be sure to check with your CPA for details. It can be difficult to cash personal checks in Honduras. You can, however, have U.S. dollar bank accounts in which you can deposit money and cash personal checks.
There are several clinics and one general hospital on the island. Larger medical centers are available on the mainland in San Pedro Sula and La Ceiba. Emergencies can be handled by air ambulance. Optometrists and dentists are also available both on the island and the mainland. A recompression chamber for divers is available at Fantasy Island Beach Resort and Anthony’s Key Resort.
Honduras is a democracy headed by a popularly elected president. The constitution has 3 governing branches - Legislative, Executive and Judicial. A National Congress of 82 elected deputies represents the Legislative branch. The Executive branch consists of a President and his thirteen member cabinet ministers.
The Judicial branch makes the country’s Supreme Court in which the nine judges are appointed by the Congress and the President. All of these officials are elected for four-year terms. The President and his cabinet appoint the governors of Honduras’ eighteen departments or states. Both parties strongly support foreign investment.
Foreign Ownership of Honduras Land
Foreign investors, as individuals, can only purchase up to three quarters of an acre of Honduran land and must start to build on that land within three years. That does not mean that one must start and finish construction of a home within three years.
You can own more land without these restrictions by forming a Honduran corporation. A Honduran attorney can perform the legal work to create the corporation. If you don’t speak Spanish, an English speaking attorney is essential since all documents have to be in Spanish. We can recommend a reputable bilingual attorney for you.
By forming this corporation, you are entitled to all the rights of a Honduran citizen regarding ownership of your property. There are no time restrictions on your building or developing for a Honduran corporation and you can own as much land as you would like. No matter what property you purchase, you will still need the assistance of a lawyer who will process all the necessary paper work, just as an escrow agent would in the States.
Real Estate Ownership
Hire an attorney you trust, not only to conduct the title search, but also to register ownership of the property via a document called an Escritura Publica or Domnio Pleno. Your attorney will make sure that the title that you are transferring is official. A publicly registered document has a square stamp on it with the court’s registry number.
The property must have a survey with the mets and bounds of the property description in order to register the documents. Escrituro Publica means it is and was a public document when transferred. Domnio Pleno means that there was not a prior public document and a judge had to make a decision to grant title to a property owner based on his testimony and documents. Notice would then be posted for 30 days. The judge will verify ownership by talking to all the surrounding property owners. When he issues Domino Pleno, it is then a public document and holds as much validity as an Escritura Publica.
Shopping for Island Property
Living in the islands can be rewarding once you have chosen a home and lifestyle that suits you. On Roatan you can find desirable properties similar to those in the subtropical United States and other Caribbean islands but often at a fraction of the cost. House hunting in the Islands requires greater care and consideration than shopping in the States or in Canada. When you find a house, condo or piece of land that interests you, ask the owner or Realtor about financing options. Annual property taxes are usually minimal. If you plan to rent your island property, you must be able to count on a reliable management agent to secure tenants and look after your home.
Terms of a sale
Financing is available but not common in Honduras. Bank financing interest rates are currently at 36% and therefore are not a realistic option for mortgages. An alternative is owner financing. Many buyers have refinanced their homes or other collateral in the U.S. in order to purchase property in Honduras since the interest rates are much lower in the U.S. The terms of each sale will differ and are generally dependent on the financial circumstances of the seller at that time. The standard for owner financing terms is usually 30% down, financing the balance for one to five years at 10% to 12%. Every situation is totally different. Transfer taxes and associated closing costs will amount to about 5% of the reported price of your property. Real estate agents charge 7% to 10% commission, which the owner pays.
Cost of Building
The most common means of construction on Roatan is concrete blocks
covered with stucco or native treated lumber. The roofing materials
vary but clay tiles and composition shingles are the standard. Your
cost will depend on your design but you can expect $48 to $90
per square foot depending on quality and finish. Most residential projects
require 6-18 months for completion. There are reputable architects
and builders available on Roatan from which to choose. A Honduran registered
architect must stamp plans.
A few planned developments are protected with deed restrictions and covenants. You must get building permits from the municipality. There are proposed zoning restrictions being planned by the municipalities.
Most of the water is subsurface well water. We advise everyone to build a cistern to collect rain water that will supplement the well system. Electricity is provided by Roatan Electric Company and is distributed to the majority of the island. Sewage is handled by private septic systems in most cases. Generators and solar power are used in outlying areas of the island.
Rental Management Companies on Roatan
There are several real estate companies as well as a couple of private companies that handle rental properties for absentee owners.
Working in Honduras
You may work here with the proper work permits. If you have the management skills and investment capital to start a new business, there are many opportunities from which to choose. An attorney can help you acquire a business license and other pertinent documents.
Many returning vacationers and property seekers hope to do the same. Your chances for finding work are better if you are creating jobs for islanders either by investing in an existing business or starting a business the island needs. For instance, many types of construction skills are currently needed on Roatan.
Considerable potential exists for the development of a major tourism industry on the Honduran Bay Islands. Although some entrepreneurs have amassed large amounts of prime acreage, opportunity is still out there for those who are adventurous enough to develop tourism and service-related business. In Honduras, you can start a business which qualifies for one of the free trade zones or export processing zones where concessions are available.
Possibilities exist in tourism and a wide variety of products for export including fruit, vegetables, seafood, lumber and other forest product, minerals, and light manufacturing or assembly operations. If you qualify for a “free trade zone”, you can import goods duty free, manufacture or assemble a product, and then export the final product without any export duties. You are also exempt from income tax for 10 years.
Even tourism projects, such as restaurants, hotels, and rental cabanas, are eligible as a “free trade zone.” Honduras allows this to promote jobs for their people. One helpful organization is the Foundation for Investment and Export Development (FIDE), a private non-profit organization established with USAID. Contact the Industrial Development Group Honduras (FIDE Branch Office) at one of its two locations.
Other investment resources are also available.