Did you purchase a property in Utila many moons ago and are interested in selling it now? Please keep in mind that I am not a lawyer, and this is not legal advice. This is simply some information that you can verify and discuss with your attorney if you want to learn how you can reduce the amount of Capital Gains you’ll pay upon selling your property. The current rate of capital gains is 4 percent (fortunately down from 10% a few years ago). You can mitigate the amount of capital gains that you need to pay by filing for a Declaration of Improvements which detail any improvements that you have made to your property. If you have built a road, constructed a home, fenced in your property, or any other improvements you have made to the land, you can apply for a Declaration of Improvements. Upon selling your property you can take your selling price, deduct the initial investment and the amount of the declaration of improvements (did you know you can also deduct real estate commissions?) to arrive at the amount to calculate your capital gains. The cost of the application is US $475 dollars to submit through a lawyer + 0.15% of the amount of a declaration of the improvement. If you compare that to the current rate of capital gains at 4 percent, most often this will result in more money in your pocket when you sell your property. ___________________________ Here’s a sample calculation provided by Attorney Juan Jose Alcerro: The current applicable regulation has 2 different scenarios, one for the situation where the Seller is a Honduran resident for tax purposes and one where the Seller is not a Honduran resident for tax purposes. If the Seller (individual or corporation) is a Honduran resident, then 4% capital gains regulation applies, and Seller is bound to pay capital gains tax on the sale. Tax payment is due 10 business days after closing and, according to the applicable regulation is to be calculated as follows: (Sales Price – “Present time value” of the real estate) / 4 [Sales Price (SP) – “Present time value” of the real estate (PTV)] / 4 where: “Sales Price” (SP) is the Price of the sale of the real estate “Present-time value” (PTV) of the real estate is the “Acquisition Price” (AP) brought to current date + Declared & Registered Improvements (DRI) Such that: In the event the Sales Price is $600,000.00 And the real estate was acquired in 1995 at a Price equivalent to $50,000.00 And No Appraised Improvements are registered SP: $600,000 PTV: $50,000 Gain: $550,000 Capital Gains Tax (4%) = $22,000 Or: In the event the Sales Price is $600,000.00 And the real estate was acquired in 1995 at a Price equivalent to $50,000.00 And Appraised Improvements are registered for $350,000.00 SP: $600,000 PTV: $50,000 + $350,000 = $400,000 Gain: $200,000 Capital Gains Tax (4%) = $8,000 Don’t forget the calculation of the Declaration application and tax: $475 (attorney and filing) + 0.15% additionally. I hope this helps. Please feel free to email me if you need more information or for a list of reputable real estate attorneys. #utilarealestate #utila
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