Renting out a property on Curaçao: what is important?

Suppose you invest in real estate on Curaçao with the aim of renting out the property. Or you rent out your villa temporarily when you are away. What do you need to take into account? What are the rules for renting out property on Curaçao?

Renting out your property can be lucrative, but it is important to be well prepared. Consider tax rules, rental legislation, and practical matters relating to management and permits. In this Burbach Roycroft Insights, you can read about what you need to pay attention to in order to rent out your property as carefree as possible.

In principle, you do not need a general permit to rent out your home on Curaçao. However, this freedom is limited by specific rules that may apply in resorts or gated communities, such as Blue Bay Curaçao Golf & Beach Resort, Coral Estate, and Jan Thiel Resort. These have a Homeowners Association (VvE) that applies its own rental rules. Always inquire about this before you proceed with renting out your property.

In addition, the Rent Commission plays an important role. The Rent Commission handles disputes between tenants and landlords and issues binding rulings. However, an important goal of the commission is to prevent such disputes by providing good information. The committee is also authorized to set a maximum rent for homes with a market value up to a certain amount. This is particularly relevant for rentals in the lower and middle segments.

As an experienced real estate agent in the high-end segment, we believe that personal attention and customization are the keys to success in the real estate market. Our high-end listings include exclusive residential villas, country houses, and penthouses that are ideal for renting out.

Renting out your property on Curaçao entails tax obligations. The most important taxes to take into account are income tax and sales tax (OB).

You are liable for income tax on rental income. The Curaçao Tax Authority applies a practical rule: 65% of gross rental income is considered taxable income. The remaining 35% is a lump-sum deduction for costs such as maintenance, insurance, and management costs. You do not need to submit any supporting documents for this 35%. Actual costs incurred for water and electricity (if included in the rent) are additionally deductible.

The amount of sales tax depends on the duration of the rental:

• Vacation rentals (less than 90 days): You pay 7% sales tax.
• Short-term rentals (90 days to 1 year): The rate is 6% sales tax.
• Long-term rentals (1 year or longer): You owe 0% sales tax.
• Longer than 1 year without a sedula: You pay 6% sales tax. An important exception applies to long-term rentals to persons who are registered in Curaçao and in possession of a ‘sedula’ (local identity card). In that case, you do not owe any sales tax.

As a property owner in Curaçao, you pay annual property tax. The rate is progressive and is calculated based on the market value of the property.

Do you have a second home on Curaçao and are you a tax resident of the Netherlands? Then this home falls under your assets in Box 3. Thanks to the tax treaty between the Netherlands and Curaçao, an exemption is granted to prevent double taxation. You must declare the home in your Dutch tax return.

A solid lease agreement is the basis for a good relationship with your tenant. In it, you lay down agreements about, among other things, the rent, the duration of the agreement, the deposit, and the house rules. Both the tenant and the landlord have rights and obligations, some of which are laid down in the Civil Code of Curaçao. In the event of disputes, as mentioned earlier, the Rent Commission can be called in.

In addition to the legal and tax aspects, there are a number of practical matters that require your attention:

Consider whether you want to manage the property yourself or outsource it to a professional party. A property manager can take a lot of work off your hands, such as finding tenants, collecting rent, and solving technical problems. If you choose to rent out the property on a short-term basis, the management will be more intensive than with long-term rentals. Shorter periods require more arrangements, such as cleaning the property, more frequent check-ins and check-outs, communication with tenants, etc.

Ensure you have professional photos and an appealing description of your property. Utilize online platforms and social media to promote your property to the right audience.

Determine a realistic rental price that matches the location, condition, and amenities of your property. Compare your property with similar listings in the area. Also consider whether the property is furnished or unfurnished: this is not common for long-term rentals, but it is for short stays or vacation rentals.

Take out the right insurance policies. These include building insurance and, if you are renting out a furnished property, contents insurance. Liability insurance is also recommended.

Good locks and hinges, and possibly an alarm system, can increase the appeal of your home. If the home is located in a gated community or resort, there is usually additional 24/7 security.

To ensure that the property meets all requirements, it is important to maintain it properly. Establish contacts on the island in advance, so that you know who to contact in the event of a leaking tap, malfunctioning air conditioning, or pests. Having a reliable local network of professionals is invaluable.

By getting all the info you need and doing the right prep work, you can rent out your place on Curaçao with peace of mind and enjoy a nice return on your investment. Check out the awesome, exclusive homes we have on offer. A great investment!