Buying your first home: here’s how to move and what you need to know
Whether you buy the house to live in or to rent it, the investment in brick is the most loved by Curacao. The economic crisis has produced a drop in prices and this could be the right opportunity to get rid of rental costs and invest, perhaps by taking out a first home loan. For a purchase of the first home safely, it is necessary to consider some points that allow you to avoid mistakes and find the “almost” perfect home. Here is what to evaluate:
- Which area? New house or to be restored?
- Taxes to be paid
- Convenience of price value
- Forfeiture of first home benefits
- Where to buy a house
Which area? New house or to be restored?
Buying from the manufacturer eliminates the problems related to the renovation but customizations are not possible. On the other hand, there are the latest technologies, greater energy efficiency and systems in accordance with the law. A period house has more charm, generally has large rooms and is more advantageous from an economic point of view. The systems, however, may not be up to standard and the renovation of bathrooms and kitchens could mean maintaining obsolete systems.
The offers of houses to renovate, on the other hand, are more numerous and, consequently, it becomes easy to find the dream house. But it is better an apartment condominium or villa? The advantages and disadvantages are numerous in both cases. Living in a villa outside the city means having green spaces and a parking space but the costs are greater than those that would have in a condominium and if the house is located in another Municipality, the buyer must transfer the residence within 18 months of purchase in order to take advantage of the first home discounts.
The apartment, on the other hand, requires that every expense of the building be approved by the assembly, thus limiting the autonomy of the individual; however it could be more comfortable than the center. Whatever the choice, those who decide to take out a first home loan can use the advantages of the deductions: 19% on interest expenses, accessory charges and real estate brokerage.
Taxes to be paid
Taxes are added to the purchase costs for the first home. When there are the first home purchases concessions if the seller is a private individual or a company exempt from VAT, the registration tax is 2% while the land and mortgage taxes are 50 Euros each. If the seller is a company subject to VAT, the buyer pays 4% VAT. The registration, cadastral and mortgage taxes are 200 Euros each.
The tax regime without the first home concessions, if the sale is made by a company exempt from VAT or by a private individual, is 9% while the mortgage and cadastral ones are fixed at 50 Euros each. VAT is applied when the seller chooses to subject the transaction to tax and is 22% for properties classified as A / 1, A / 8, A / 9 and 10% for different cadastral categories. The fixed registration tax is 200 Euros, as well as the mortgage and cadastral taxes.
The convenience of the price value
The system launched in 2019 presents tax benefits for the buyer and protects against any disputes with the tax authorities. What’s it about? In the transfer between individuals, taxation refers to the cadastral value and not the price: this is an advantage because the cadastral value is always lower. If there are no concessions for the first house, the calculation is made by multiplying the value of the cadastral income, revalued by 5%, by 120. The coefficient changes with the concessions for the purchase of the first house where the cadastral income, revalued by 5 %, is multiplied by 110. This system does not apply to sales subject to VAT. The concessions are provided for houses of category A / 2, A / 3, A / 4, A / 5, A / 6, A / 7 and A / 11 while they are not allowed for stately homes (A / 1), villas (A / 8) and historic buildings (A / 9).
The forfeiture of the benefits for the first home
The facilities for the purchase of the first home are enjoyable if the declarations are true and if within 18 months of the purchase, the transfer of the buyer who resided outside the Municipality took place. In the event of mendacity or non-compliance, taxes are paid without any facilitation, together with interest on arrears and penalties. However, the law takes into consideration some causes of force majeure for which there is no forfeiture of the benefit: for example in the case of non-habitability of the house or when the previous tenant does not release it.
Where to buy a home
The house can be purchased by a private individual, by a real estate agency or by participating in an auction. In the first case, a lot of caution is required: you need to view the documents of the property, check the conformity of the systems, and inquire with the administrator of the condominium if there are arrears to be paid and if renovations are planned. At the technical offices of the Municipality, a check on the usability and habitability may be requested.
Anyone looking for a home through the intermediation of a real estate agency must verify that it is a professional registered in the Register. The presence of mortgages and a possible renovation of the building are information that should not be sought independently because they are provided by the real estate agent to whom the commission will be paid at the time of the compromise.
The purchase costs of the first home can be very low by participating in an auction: often, in fact, the property is sold at a lower price than that of the appraisal and if it remains unsold, at the next auction there is a cost reduced by 25%. Buying a property in Curacao at the auction means using a transparent system where all participants compete equally. The appraisal documents are always available and whoever wins the property gets it relieved of any mortgages. The buyer is given all the information to make a weighted purchase. The first document that the interested party must consult is the sales order, which contains the base price, the terms for the deposit of the offer and the date by which the hammer price must be paid. The online auctions, of course, offer identical guarantees but in addition they allow a considerable saving of time: to participate, simply register and deposit the deposit.