The real estate tax in Nicaragua is an annual tax payable to the municipality where the property is located, in compliance with the provisions of the Decree No. 3-95 of "Real Estate Tax", published in the Official Gazette No. 21 on January 31, 1995. The real estate tax paid to municipalities in Nicaragua is 1% of the 80% of the taxable amount.
The taxable amount is the property value, buildings and any permanent improvements located in the property. The property value is based on the cadastral value (according to the municipality's records), the self-declared value of the property made by the taxpayer or the estimated value established by the municipality.
The real estate tax is collected by the municipalities and notified to the taxpayers through an official notice or appraisal. This tax can be paid as follows:
- 50% can be paid during the first quarter of the year and the balance no later than June 30.
- If 100% is paid during the first quarter of the year, the taxpayer will be subject to a 10% discount of the full amount.
The following entities and individuals are exempted from paying this tax: indigenous communities, non-profit welfare and social assistance organizations, houses occupied by retired individuals, universities and higher technical institutions, entities under Free Trade Zone Regime, cultural, scientific, sport and artistic institutions, among others.
It is important to mention that the statute of limitations for this tax is two years from the date in which payment obligation was enforceable. Likewise, if you do not agree with the value or basis for calculating the tax notified by the municipality, you can appeal administratively against it.
To obtain legal advice in Nicaragua regarding this matter, please do not hesitate to contact us.
Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.