Save on Taxes by Living Abroad
For many, retirement is just around the corner. Retirement should be a time of relaxation. You shouldn’t have to worry about whether your pension is going to keep you afloat or not.
On average, a single-family home in the U.S. can cost $3,000 in property taxes. This price can be as high as $7,000 a year in some states like New York, New Jersey, Massachusetts, Texas, Virginia, Connecticut, and California. This can be a hefty burden for those who are living off of social security or a pension. How can you afford to enjoy retirement if your property taxes are through the roof?
One way Americans are finding relief from these high taxes is by seeking retirement overseas. These havens have low property tax rates, which means low cost of living. Mexico and Central American locations, such as Belize and Nicaragua, are popular destinations to do just that.
Many of the countries mentioned below already have a quite low cost of living and perks for expat retirees. Central America and parts of Mexico offer North American quality of life in a tropical setting. Living in an inexpensive Caribbean paradise seems like the most ideal way to spend an overseas retirement. Imagine spending your days on the beach, free from worry of high property taxes.
Nicaragua
The property tax rates in Nicaragua are approximately 1% of the municipal cadastral value of the property. If the property is an urban house valued at less than $400,000, or a rural house with 2.4 acres or less, you don’t have to pay these property taxes. Farmland up to almost 51 acres is also exempt.
Citizens, residents, and non-residents of Nicaragua are taxed on any income originating in the country. If you sell your property in Nicaragua, you will be taxed up to 30% of your earnings.
A Nicaraguan retirement is filled with stunning natural beauty, a cheap cost of living, and political stability. Think Costa Rica with a lower cost of living. The warm, dry climate, paired with the laid back lifestyle, makes Nicaragua not only a smart choice financially, but an all around good time.
Belize
As a whole, Belize has very low property taxes. Depending on where the property is, the rate is around 1.5% of the assessed valuation. The reason the taxes are low is because assessed valuation is pretty low. You can expect to play less than $500 a year on most houses and condos. In many cases, you’ll pay less than $100.
Compared to the U.S., Belize has incredibly low property tax. Many expats who own a three bedroom home with half acre of land in the Cayo district, for example, rarely pay over $50 in property taxes. On the Cayes, with views of the Caribbean Sea, you can own a two-bedroom, two-bathroom condo with a view and expect to pay less than $300 a year on property taxes.
Another great bit of information is that there is no capital gains tax in Belize.
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Living in Belize offers amazing marine life and exploration opportunities. On the mainland, spend your days exploring the Mayan ruins. If that’s not your thing, the country offers some of the best snorkeling and scuba diving in the world. Choose from the second largest barrier reef in the world, or the Blue Hole, a beautiful natural wonder drawing people from all over the globe.
Mexico
The low tax rates in Mexico are very appealing, especially in comparison to the other North American countries. It’s not unheard of to pay less than $100 in property taxes annually. Rates rarely fall higher than $300 a year. Property tax rates are decided by the municipality of residence in each state.
In Mexico, there are two ways to determine capital gains tax. The first way is 25% of the declared value of the transaction. The second way is 30% of the net value, which is the difference between the assessed values at the time you bought the property and when you sell it. The capital gains tax will be calculated both ways by an accountant, and you pay the lower rate.
Choosing Mexico is not only good for your wallet. Located directly south of the U.S., Mexico is close to home, allowing you to visit family quickly and painlessly. Many regions of Mexico have beautiful beaches and historic cities to explore.
Seeking retirement abroad can ease your worries by lowering your cost of living. The three countries mentioned above are just a short flight away. Living abroad allows you to live life to the fullest without holding back.
If you are looking to retire or live abroad, Escape Artist can help you out. If you don’t know where to begin, check out some of these amazing resources.
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