Buying a car in Nicaragua is generally more expensive than buying the same car in the US. For example, a common car, maybe 2015 Toyota Corolla would cost US $16,000 – $17,000 plus tax in Nicaragua. The same car in the US would maybe costs around $15,000. What kills you when you buy in Nicaragua is the tax. In Nicaragua the tax is twice as much as what you would pay at least in the state where I’m from, in Indiana. Here in Nicaragua the sales tax is 15%. That’s a tax on everything from what you would buy at your grocery store to buying a car, to when you buy a home; it’s a 15% flat tax.
If you buy a used car we don’t necessarily have to pay the 15% when you buy it, but you still have to pay tax on the transfer of the title of the car to your name, which will be on the value of the car.
I don’t recommend bringing a car down to Nicaragua from the States. One of the reasons is that they’ll tax you on the car when you bring it here. So let’s say you bought the car in the US. It was a new car and you paid tax on it in the US, you paid the shipping to bring it down here, then you have to pay customs to be able to drive it here, and then you also have to pay the taxes on getting the car under your name. If you’re not, at least, a permanent resident of Nicaragua already, if you don’t already have your cedula, well, then that proves to be something costly, time-consuming, and most likely in the end, unless the car has some sentimental value to you, it’s not really worth it.
However, If you are a Nicaraguan citizen and you’ve lived in the States for at least 10 years, there’s a tax incentive to encourage you to come back to Nicaragua to live, you would be able to bring certain things into Nicaragua tax free.
This also applies if you are an American citizen or a foreign citizen, and you have proof of income. This income could be through a pension, retirement or Social Security of at least $650 a month, or you might have an investment or a business back at home that someone else runs but you still get dividends or you still get a paycheck every month of at least $750. If you can prove this, then there’s a tax incentive very similar to the one I just mentioned for Nicaraguan citizen. So, if you qualify, if you were to bring a car down or bring something from your home tax-free. This could be, for example, a sofa, a huge 80” TV or certain household items or appliances that you might not be able to find easily down here. Getting qualified for this is a process, and it’s not quick and easy to do, but if you’re planning on moving down here, living here, retiring here, then it could be something that you could think about. Also, if you do that, there’s the option of buying a car here in Nicaragua tax free with the maximum value of $25,500.
The process to qualify for these incentives usually takes a good 3 to 4 for months.
(Toyota off-road vehicle attempting to ford a stream in Nicaragua, pictured.)