Venezuela: Overview

RENTAL YIELDS

Last Updated: Dec 09, 2005

Yields can be as high as 15% in Caracas

Because of the acute shortage of quality housing, yields for apartments in Caracas are around 10% to 14%. Houses can fetch higher yields, up to 15.2% for a 350 sq. m. property.

Rental yields for houses in provinces that are popular for tourists and foreigners can reach up to 20%. These provinces are Macaraibo, Maracay, and Barquisemento. The most expensive properties can be found in Margarita Island, along the Caribbean, a 100 sq. m. property would cost around US$350,00 while a same sized house in Caracas would only cost US$95,000.

Read Rental Yields  »

TAXES AND COSTS

Last Updated: Feb 18, 2009

Income tax and CGT are high at 34% in Venezuela

Effective Tax Rate on Rental Income
Monthly Income	US$1,500	US$6,000	US$12,000
Tax Rate	22.2%	20.9%	23.2%
Click here to see a worked example
Source:			Disclaimer

Rental Income: Net rental income earned by non-residents is taxed at a rate of 34%. Depreciation or capital allowance is not deductible when computing for the taxable income.

Capital Gains: Capital gains earned by non-residents are taxed at a flat rate of 34%.

Inheritance: Gift and inheritance tax is levied at progressive rates, from 1% to 55%.

Residents: Resident individuals are taxed on their worldwide income at progressive rates, from 6% to 34%.

Read Taxes and Costs  »

BUYING GUIDE

Last Updated: Mar 13, 2007

Total transaction costs are high in Venezuela

Total roundtrip transaction cost for buying property are around 13% to 16.5%. The biggest expenses are the real estate agent's commission (5%) and the Municipal Solvency Certificate (3.93% - 5.24%), both paid for by the seller. Registration takes about 33 days, with 7 procedures.

Read Buying Guide  »

LANDLORD AND TENANT

Tenancy laws are pro-tenant

Tenant Security: Landlords have in the past relied on one-year contracts due to landlord/tenant's difficult relationship on account of occupancy laws that highly protect the tenant.

ECONOMIC GROWTH

Last Updated: Apr 15, 2009

Venezuela in near economic collapse

Venezuela’s economic growth for the past few years has been closely linked to movement in oil prices. After contracting by an average of 8.3% in 2002 and 2003, Venezuela’s GDP growth surged to 18.3% in 2004, then averaged 9.69% from 2005 to 2007.

Oil and gas account for more than 90% of exports, around half to the US.

With the US in recession and oil prices down drastically, economic growth in 2008 slowed to 4.8%. The economy is expected to contract by more than 5% in 2009 and 2010. The economic contraction will likely push more people into poverty than when Chavez assumed office.

Venezuela’s original budget for 2009 assumed oil prices at around US$60 per barrel. With oil prices currently moving within the US$45 – US$50 level, the government has announced tax hikes and spending cuts to address the deficit. With international borrowing almost impossible, the government will be forced to borrow internally. VAT is being hiked from 9% to 12%, and domestic debt is being increased, squeezing further the already diminished formal market.

The economy is expected to contract. But inflation is expected to remain high at around 30% in 2009 and 2010, similar to its level in 2008.

Macroeconomic mismanagement such as excessive printing of money has pushed inflation in Venezuela to classic Latin American levels. Average inflation from 2000 to 2007 was 19%, and never since 1983 has inflation been below 10%.

The Venezuelan Bolivar (BCV) was pegged to the US dollar at US$1 = BCV2,150 in March 2005. In January 2008, the Bolivar was replaced by the “strong Bolivar” (VEF) by dividing everything by 1,000, the new official exchange rate is now US$1 = VEF2.15.

However, the value of strong Bolivar in the black market, is much lower at around VEF5.50 – VEF5.75 per US dollar. The currency control brings unnecessary complications to damaging the economy.