Tax on property income in Belize
Taxation Researcher | March 10, 2020
Effective Tax Rate on Rental Income
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Global Property Guide research
Nonresidents are taxed on their Belize-sourced income. Married couples are taxed separately.
Income is classified according to sources and is taxed accordingly. Income tax is levied at a flat rate of 25%.
Nonresidents receiving rental income pay business tax at a rate of 3% on the gross rental income. Business tax is due monthly and is generally a final tax.
If taxpayers want to deduct income-generating expenses, they can opt to file an income tax return at the end of the tax year.
Taxpayers can claim expense allowance when they file their income taxes. The process is as follows:
- Compute for the total business taxes paid for the tax year.
- Compute for the income tax payable, deducting income generating expenses from the gross revenue.
- Compare results. If the income tax payable is bigger than the business tax, the taxpayer doesn´t have to pay the difference. If the business tax is greater, proceed to the next step.
- Subtract income tax payable from business tax.
- Use the difference as an expense allowance on the profit and loss statement when submitting the income tax return for the year.
Deductible income-generating expenses are as follows: repairs, property taxes, insurance, and mortgage payments.
There is no capital gains tax in Belize.
Residents pay 10% stamp duty when purchasing property.
Land tax is levied at a flat rate of 1% on all unimproved land located in Belize. Property owners are liable to pay this tax.
Property taxes are levied on actual rental income of the property (if it is rented out) or on the assessed rental values, which are likely to be underestimated by the authorities. The tax is levied at 12.5% for occupied properties located in urban areas but the tax rate is levied at 2% for unoccupied properties.
In Belize City, property tax on both occupied and unoccupied property may not exceed 2% of the market value of the property.