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Honduras Real Estate
Restrictions on Foreign Ownership
In Honduras foreigners may purchase real estate as an individual or through a Honduran corporation. An individual may purchase land up to three-quarters of an acre, and a married couple may own an acre and a half together.
The Constitution of Honduras contains Article 107 that states foreigners may not own land within 40 kilometers (25 miles) of borders and coastal areas. Owning land in these areas is possible by filing for authorization with the Tourism Institute. If you are granted permission, you are required to build within 36 months, or you will face a fine of 20% of the property’s value.
 Honduras Real Estate- Ownership Options
Because individuals are restricted to purchase property up to three-quarters of an acre in size, it is necessary to form a Honduran Corporation for purchasing larger properties. With guidance from an Honduran lawyer you can form a corporation and purchase more than three-quarters of an acre.
Honduras Real Estate- Forming a Honduran Corporation
Two types of corporations are available in Honduras allowing you to purchase large pieces of land, stock corporations and limited partnerships. Ownership through documents is involved for a limited partnership, and it is not recommended.
A stock corporation will allow the ownership of large tracts of land and the ownership of the corporation is represented by stock certificates.
With the formation of a corporation you will enjoy full ownership of your property and be granted the same rights as a Honduran citizen would with owning a property. No restrictions are imposed on building on or developing your land with a corporation.
When forming a corporation, expect it to take about eight days to get the shares issued and your ID card that will allow you to buy land. Fees and costs of forming a corporation are usually between $1,000 and $1,500. This includes registration fees, incorporation fees, and your attorney plus all expenses. At least five shareholders are needed for the corporation, however the shareholders are required to perform any special duties.
 Honduras Real Estate- Buying Property in Honduras
All documents involved with purchasing property in Honduras will be in Spanish, so it will be necessary to have a bilingual lawyer.
1- Title Search Conducted by Notary
Notaries are responsible for overseeing the transfer of title, and the notary’s first job is to conduct a title search. It is highly recommended to take out title insurance on your property.
To avoid any disputes, make sure you will be able to legally own your property before settling on it. Once your attorney notifies you of a clean, clear and free title, only then should you settle on the property.
2- Documents Filed by Notary
After the title search has been completed, the notary will file a escritura publica or a dominio pleno.
-escritura publica states that the ownership of the property has been verified. It will also show that the attestation of such ownership was filed as a public document when the transfer of the property took place.
- dominio pleno shows that prior to the transfer there was no record of ownership, and that a judge must make a decision to grant title to petitioner or not. For 30 days a notice will be posted during which time the judge will talk to surrounding landowners to help him verify ownership. When the dominio pleno is issued, it will serve as a public document and is as valid as an escritura publica.
3- Record Title with Land Registry
Submit the escritura to the local Land Registry for them to record it. Make sure the document is publicly registered by looking for a square stamp with the court’s registry number.
 Honduras Real Estate- Transaction Costs
For lawyers, expect to pay by the task instead of the hour. Expect a range from 7% to 10% for real estate commissions that are payable by the seller. Inclusive of attorney fees, the cost of setting up a corporation to own property will be from $1,500 to $1,800.
Honduras Real Estate- Taxes
Transfer Tax: The type of property being purchased will determine the amount of transfer tax. Raw land is 4%. For land with a building or construction on it, the amount imposed is 3%.
Property Tax: The municipality collects the annual property tax and the average amount is 0.25%.
Inheritance and Gift Tax: On the inheritance of real estate there is a tax of 1%.
Rental Income Tax: Any Honduran property earning rental income is subject to tax at regular income tax rates. This is a sliding scale from 0% on annual incomes under $4,045 per annum, to a maximum of 40% on annual incomes over $57,800.
Capital Gains Tax: All persons in Honduras will pay a 10% tax on capital gains when selling property.
 Honduras Real Estate- Financing
It may be difficult to finance the purchase of a property through a local financial institution. Average interest rates are reaching 35%, so that may not be the best financial decision to go that route. Another possibility is financing your purchase through other property owners or developers who will offer financing over several years. An average interest rate of 10% can be expected with the owner holding the mortgage until the loan has been paid in full.
Or, you could a arrange a loan from your home country.
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