Who Pays Transfer Taxes in Nicaragua?

Understanding a Unique Practice in San Juan del Sur

When buying property in Nicaragua, one of the most common questions is:

Who is responsible for paying the transfer tax and registration fees at closing?

The answer may seem simple at first, but the practice actually varies depending on where you are in the country — and San Juan del Sur is the perfect example of this nuance.

- What the Law Says :

According to Law No. 724 — Impuesto sobre Transmisiones de Derechos relativos a Bienes Inmuebles (1962), the seller is considered the primary responsible party for paying the transfer tax when a property changes ownership.

However, the tax code also allows the Nicaraguan tax authority to hold either or both parties responsible for payment.

This legal flexibility opens the door for negotiation.

🏝️ A Local Exception: San Juan del Sur While the legal framework is the same nationwide, regional practice tells a different story:

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San Juan del Sur & surrounding beach areas : Buyer pays — in most transactions

Rest of Nicaragua : Seller pays — almost always        

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Why the difference?

In coastal investment zones like San Juan del Sur, real estate deals often involve international buyers.

Over time, the market adapted: sellers typically expect buyers to cover these costs, especially when the price already reflects strong demand and the property includes valuable improvements like ocean views, paved access, or utilities installed.

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So… Who is Right?

Both practices are equally valid. There is no law that mandates the buyer must pay. There is no law that forbids it either.

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A. It is simply a contractual negotiation‍

B. Defined clearly in the purchase agreement prior to closing The important part is to agree and document who will pay what — to avoid surprises during the transaction.

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What Buyers and Sellers Should Know

- If you are buying in San Juan del Sur, be prepared that you may be asked to pay the transfer tax

- If you are buying elsewhere, expect that the seller will likely cover it

- Always review the contract to confirm responsibilities

- There is flexibility — everything is negotiable ---

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*** Bottom Line > In Nicaragua, who pays transfer taxes is not a matter of right or wrong — it’s a matter of market customs and negotiation between buyer and seller.

Understanding these local variations helps ensure a smooth and transparent closing process, especially in high-interest markets like San Juan del Sur.

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Source:

LEY N°. 724,LEY DE IMPUESTO SOBRE TRASMISIONES DE DERECHOS RELATIVOS A BIENES INMUEBLES
Aprobada el 29 de junio de 1962Publicada en La Gaceta, Diario Oficial N°. 146 del 30 de junio de 1962