Aruba: Overview
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Regional Statistics
Making the desert bloom
"Aruba is very desert-like, and we have some of the best beaches in the Caribbean,” says Susi van Lier of Sunshine Real Estate. “Yet we haven’t yet really been ‘discovered’ yet.”
Residential property prices have not risen for the past few years in Aruba (pop. 103,000, GDP/cap US$28,000 PPP).
“I have just come from Europe, when I compare prices, with residential prices in Europe, for instance with leisure properties in Spain, we are still on the lower site of that,” says van Lier.
The average price for properties was around US$2,280 per square metre (as of November 2005),according to Global Property Guide research.
However Aruba is in the grip of a construction boom, and the noise may have put off buyers. The new building includes both low and high end, including the first condominium on the beach, with units ranging from US$5-600,000 to US$1 million. There are also near-beach projects, ranging from US$180,000 for small condos to US$4/500,000 for large condos.
Aruba became a separate, self-governing member of the Kingdom of Netherlands on 1986 when it seceded from the Netherlands Antilles.
There are no restrictions on foreigners buying property.
RENTAL YIELDS
No yields figures
Houses in Aruba cost an average of $1,571 per sq. m. House prices can go as high as $1,790 per sq. m, or almost $900,000 for 500-sq. m lots.
There is not enough rental information for long-term leases.
TAXES AND COSTS
Rental income taxes can be very high
Effective Tax Rate on Rental Income |
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| Monthly Income | US$2,500 | ||
| Tax Rate | 4.4% | ||
| Click here to see a worked example | |||
Source:
Disclaimer
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Rental Income: Net rental income is taxed at progressive rates ranging from 3% to 57%, depending on the tax base, which is adjusted annually for inflation.
Property: Property taxes are about 0.4% of the property’s assessed value, computed based on the government’s prescribed valuation method.
Capital Gains: There are no capital gains taxes.
Inheritance: Non-residents do not pay inheritance taxes.
Residents: Residents are taxed on worldwide earnings.
BUYING GUIDE
Buying costs are low in Aruba
Round-trip transaction costs are around 8.5% to 9% of the property's value, with the biggest cost being the agent’s commission, at around 5% the property value. Other costs are the transfer tax (3%) and notary fee (0.5% to 1%), usually paid by the buyer.
LANDLORD AND TENANT
Rental law is pro-tenant in Aruba
Rent: Rent and rent increases can be freely agreed (in practice), though in law, the Rent Assessment Advisory Committee (the Committee) is responsible for determining the rent, approving rent increase, tenant evictions, and contract termination.
Tenant Security: Tenants can become ‘embedded’ in properties. The landlord needs permission from the Committee to end indefinite period tenancy contracts leases. Definite period tenancy contracts cannot be terminated even after the termination date, if the tenant wishes to extend.
ECONOMIC GROWTH
Tourism pushes Aruban economy
Aruba is famous for its pleasant and very dry climate. Its flattish landscape of aloe and cactus is unique in the Caribbean.
The south and west coasts have miles of pristine white beaches and many picturesque hidden bays. Aruba is outside the hurricane belt, and cooled by constant trade winds.
Aruba’s economy is primarily based on tourism, oil refining, and offshore financial services. Stay-over visits saw a downturn 2001-2003 due to 9-11, then a revival in 2004, with total number of stay-over visitors increasing around 13.4% from 2003 to 2004
The island has suffered adverse publicity from the Nathalee Holloway case, which involved the disappearance of an attractive Alabamian 19-year old on May 30, 2005, during a high school graduation celebration trip. Several suspects were arrested, questioned, and later released, but no-one has been charged. Natalie’s disappearance and the arrests received an extraordinary amount of popular coverage on Fox News, CBS, and other TV networks, generating strong US sentiment against the island.
This has impacted Aruba’s tourist trade, and residential property.
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| RESIDENTIAL PROPERTY FACTS | |
| Price (sq.m): $1,443 For a 200 sq. m. property, usually an apartment. | Rental Yield: n.a. |
| Rent/month: n.a. | Income Tax: 4.40% Assumptions: Owners are a non-resident couple drawing US$ / €1,500 per month in rent, with no other local income. |
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Roundtrip Cost:
9.0%
The total cost of buying and then reselling an apartment. Includes: * all transaction taxes and charges: * lawyers' and notaries' fees * agents' fees Assumptions: The buyers are non-resident foreigners. The apartment cost US$250,00 / €250,000. |
Cap Gains Tax: 0.0 Assumptions: The property was bought for US$250,000 / €250,000, and sold 10 years later, after a 100% appreciation. |
| Landlord & Tenant Law: Pro-Tenant Rating is based on a detailed study of each country’s law and practice. | |
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