Investing in the Bay Islands

VIew of the clear blue ocean  in Utila Bay Island Honduras

View of the clear blue ocean in Utila Bay Island Honduras where Prime Real Estate is always available

As one travels through this wonderful country, many people begin to think about purchasing a home or some property here.

Much has been said and speculated about purchasing real estate in Honduras. Investing, in the Bay Islands in particular, has become more and more popular in Honduras. There have been a growing number of foreign investors who have purchased property and moved to this piece of paradise in the Western Caribbean as well. In an effort to make it easier for those considering investing in the Bay Islands or elsewhere in Honduras, to understand exactly where they stand when making a real estate investment in the country, following is a short essay on the legality and security to consider when deciding on a possible investment location. Before you purchase real estate in Honduras, however, it is stressed that you visit both a reputable real estate agent as well as a reputable Honduran attorney to ensure that your investment is safe.

The current Honduran Constitution limits ownership of property within 40 kilometers (25 miles) from where land borders the sea exclusively to Honduran citizens. The purpose of Article 107, which defines this limitation, is basically meant to preserve the integrity of Honduras’s territory. In an effort to allow legal ownership of property by foreign nationals, the Honduran Congress, together with the Executive Office, created a series of decrees that have paved the road for investment of foreign capital in the Bay Islands, as well as in beachfront areas along both the Caribbean and Pacific coasts of Honduras. (Editors Note:  The Country’ of  Honduras international borders;  This article states that it includes the entire borders of foreign countries also) exclusively to Honduran citizen’s. The following correction should be noted: The limit is 3000 square meters; (Approximately .74 Acres). Larger properties can be purchased by non-Hondurans by establishing a Honduran Corporation to hold the asset. There also may be additional advantages in owning property in a Honduran Corporation; in regard to both estate planning and the possible tax-free status in the Bay Islands of Honduras. As always we advise you consult with a qualified Honduran Real Estate Attorney.

The most important of these bylaws is Decree 90-90, which was issued in 1990, during the government of then President Callejas. The object of this decree is “to regulate ownership of real estate by non Honduran residents or corporations that are not totally owned by Honduran nationals in the areas restricted by article 107” of the Honduran Constitution.  It specifically refers to land that is considered of great value for the development of tourism by the Honduran Ministry of Tourism. Thus, the Ministry of Tourism has the legal faculty to determine whether specific land has potential for tourism, and if such, declare it a Tourism Priority Area in the hopes of attracting foreign investment to help develop tourism infrastructure to Honduras.

This same decree authorizes foreigners to purchase property in a Tourism Priority Area without any additional permit, as long as the property is no larger than three thousand square meters (roughly ¾ of an acre). It also specifically authorizes purchasing condominiums within this area. Property larger that the ¾ of an acre can be purchased, as long as the Honduras Ministry of Tourism authorizes the purchase. This operation is usually approved only if a tourism related investment is being made, such as a hotel or restaurant being built on the property.

It is important to mention that the Bay Islands of Honduras, specifically Roatan, Guanaja, Utila, Barbareta, Helene, Morat, and the adjacent Cays were declared a Tourism Priority Area by the Ministry of Tourism as far back as the 16th of July, 1982. Decree 90-90, which goes back to the 27th of August, 1990, therefore automatically includes the islands, and opens the door for foreign investment on the above mentioned islands.

In a further effort to promote investing in the Bay Islands, the government created the “Tourism Free Zone of the Bay Islands”. The purpose of this new decree is “to promote national and foreign investment in the territory of the Bay Islands to create sustainable socioeconomic growth, protecting the environment in harmony with the development of tourism”. This Tourism free zone covers the entire extent of the department of the Bay Islands with the sole exception of Cayos Cochinos (also known as the Hog Keys), which is a National Marine Monument, which does not make it compatible with the decree.

This Tourism Free Zone area, known as “Zolitur” looks to promote development and investment in tourism related activities by making it a tax free area, allowing imports of goods into the department of the Bay Islands. The aim being to make it very attractive for developers as well as for business owners and residents investing in the Bay Islands. Basically, you can now purchase a property, import all the goods you need to furnish it, including your car or boat or airplane, without having to obtain import permits, paying taxes, etc. This new law implements a capital gains tax of 4%, which is based on the value of the land or property you purchase.

As a result of the above bylaws, purchasing real estate in Honduras provides for a safe investment.

Finally, the Honduran Central Government has invested a good sum of money in creating a data base matching the entire territory of Roatan, Guanaja and Utila to the legal owners, and tying the property into satellite maps of the islands. As such, you should be able to check the legality of any title, and confirm who the legal owner of any parcel of land is in the Bay Islands of Honduras. This unique date base is the first of its kind in Latin America, and has been designed to protect people investing in the Bay Islands. This means that any attorney can check property titles and determine if the person that is selling a specific property is the real owner. As a general rule, it is a good idea to hire a local lawyer, or at the very least, one that travels regularly to the islands, and is familiar with the local authorities. There are several reputable lawyers who can help you out as far as setting up your investment in the Bay Islands.

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