Properties for Sale in Venezuela

Tax and Offshore Investment in Venezuela

Tax regimes vary greatly throughout Latin America. While some countries are investor friendly, others are not so open. There are several benefits (i.e. retirement programmes, tax discounts) but also some tax obligations. In this section we provide an analysis of the different tax structure in each country where January First Real Estate lists properties. This information may be very important for you to choose you retirement destination or where to invest. Keep in mind that there are related visa and residence issues which are discussed in Visa/Residence Requirements. In case you need more information or have doubts on any of these issues, the specialised staff in January First Real Estate will be glad to answer all your questions, click here.

Real estate assets are, without doubts, one of the most secure and profitable ways of investment. There are two main reasons for this:

1. Properties always tend to increase their value in the long term.
2. They generate an income for their exploitation (rental/yields).

Taxes and Costs in Venezuela
Effective tax on Rental Income
Monthly income
US$1,500: 22.2%
US$6,000: 20.9%
US$12,000: 23.2%

Earnings arising from properties located in Venezuela are subject to income tax. The regime is territorial, i.e., revenues obtained from real property located in the country are taxable, whether they are received by a resident or a nonresident taxpayer.

Income Tax (Impuesto Sobre la Renta)
Non-residents earning income from leasing real estate properties are taxed at 34%. The taxable income is computed by deducting actually incurred costs from the gross income. Allowable deductions are administrative expenses (maximum of 10%), repairs and maintenance, insurance, real estate tax, and municipal tax. Cost-of-purchase depreciation (capital allowance) is not deductible.
Payments could be subject to withholding at 34%.

Municipal Tax (Impuestos a los Inmuebles Urbanos) or Land Registry or Real Estate Tax
This is payable to the municipality where the real estate is located. The taxpayer is the proprietor. Historically, the value of the property, its productivity or the effective income derived from it was considered as the tax base. The actual tax base applicable depends on the municipality.

Capital Gains Tax
Capital gains earned by non-residents are taxed at a flat rate of 34%. The taxable gain is computed by deducting the costs (acquisition costs, improvement costs, and registration duties) from the gross selling price.

Value Added Tax
Sale or transfer of ownership of real property is not subject to VAT.

Living There
The taxation of residents in Venezuela is in tax units (Unitaria tributaria), which is an adjustment index. The tax bands are all in tax units, whose monetary value changes depending on the changes in the consumer price index. The tax unit or TU (unitaria tributaria) from 29 January 2006 is VEB33,600 (US$15.67).
Residents are those individuals who spend more than 183 days in Venezuela throughout a given calendar year. Residents are allowed personal deductions and allowances.
Venezuelan residents whose annual net income is greater than 1,500 TU (US$23,505) are subject to income tax. Resident individuals are taxed on a worldwide income basis starting 1st January 2001.
The income tax rates for resident individuals are as follows:

Income tax
Taxable Income in Tax Units (US$) / Marginal Tax Rate
Up to 1,000 (US$15,670) / 6%
1,001 – 1,500 (US$23,505) / 9% on band over US$15,670
1,501 – 2,000 (US$31,340) / 12% on band over US$23,505
2,001 – 2,500 (US$39,175) / 16% on band over US$31,340
2,501 – 3,000 (US$47,010) / 20% on band over US$39,175
3,001 – 4,000 (US$62,680) / 24% on band over US$47,010
4,001 – 6,000 (US$94,020) / 29% on band over US$62,680
Over 6,000 (US$94,020) / 34% on all income over US$94,020

Allowances
The following may be deducted from taxable income:

• Interest on loans to acquire residence, up to 1,000 TU (US$15,670)
  
• Rent payments for housing, up to 800 TU (US$12,536)
  
• Tuition paid to Venezuelan educational institutions for the taxpayer’s education or for the education of his descendants not older than 25 years of age
  
• Life, surgery, hospitalization, and maternity insurance premiums
  
• Medical, dental and hospitalization payments
  The tax law gives the taxpayer the option to itemize deductions or to use a standard lump sum deduction of 774 TU (US$12,129). Deductions need to be supported with invoices, which must be attached to the final income tax return. If the taxpayer opts for the standard lump sum deduction, no proof is required.

Tax Credits
Individual resident taxpayers are entitled to a personal tax allowance of 10 TU (US$157). Likewise, they are also entitled to a tax allowance equivalent to 10 TU (US$157) for their non-separated spouse, for each immediate parent residing in the country and who is dependent from the taxpayer, and for each child under age or is currently studying and is 25 years or younger, or in those cases where the child is disabled and cannot work.
However, individual resident taxpayers who have not separated their marital property must make a joint declaration of their income, save in those cases where they choose to file separately income from wages and salaries from professional fees.
In the event that the individuals choose to declare and file separately, they will not be entitled to the 10 TU (US$157) for their non-separated spouses and must divide the credits attributable to their dependents, as well as the deductions corresponding to education and insurance premium expenses.

Foreign Tax Credit
Residents will be allowed to credit foreign income tax paid against Venezuelan tax imposed on their foreign-sourced income.

Venezuela, make your dream investment come true.