Nicaragua Rental Income Tax Guide 2026

Overview — Rental Income Taxation

Rental income from immovable property (residential, commercial, industrial) is taxable in Nicaragua. The tax treatment depends on whether the landlord is an individual or a legal entity. Individuals report rental income as part of their personal income and are taxed at progressive PIT rates (0–30%). Corporate landlords include rental income in their gross revenue and are taxed at the standard CIT rate of 30%. Expenses directly related to generating rental income may be deductible.

Tax Rates for Rental Income

Rental income tax rates depend on the taxpayer type:

• Individuals (Nicaraguan residents): Taxed at progressive PIT rates 0–30% based on total annual income including rent
• Corporate landlords: CIT at 30% on net rental income (after expenses)
• Non-residents: 15% final withholding tax on gross rental income

Allowable Deductions

Landlords may deduct expenses directly related to generating rental income, including:

• Property management fees
• Repairs and maintenance costs
• Insurance premiums
• IBI (annual property tax) paid
• Interest on mortgages (for rented properties)
• Utilities paid by the landlord
• Depreciation on the building
• Agent commissions

Individuals can choose between deducting actual expenses or claiming a standard deduction. The standard deduction simplifies compliance for small landlords.

Withholding Tax on Rental Payments

When a tenant pays rent to a non-resident landlord, the tenant must withhold 15% of the gross rent and remit it to the DGI. This 15% WHT is a final tax for the non-resident landlord. For resident corporate landlords, no WHT is required on rental payments. For resident individual landlords, the tenant is generally not required to withhold tax — the individual declares and pays the tax directly through the annual return.

Filing Requirements

Individual landlords must declare rental income as part of their annual income tax return, filed by 31 March of the following year. Corporate landlords include rental income in their monthly advance payments and annual CIT return. Non-resident landlords may be subject to final WHT and do not need to file additional returns if tax is properly withheld.

Short-Term Rentals

Income from short-term rentals (e.g., Airbnb, serviced apartments) is also taxable as rental income. Short-term rental operators must register for IVA if making taxable supplies. Platform-based rentals are subject to the same tax rules as traditional rentals. The DGI has increased focus on digital platform rental income.

FAQs

Can I claim a standard deduction instead of tracking actual expenses?

Yes, individual landlords can claim a standard deduction as an alternative to itemising actual expenses. The standard deduction percentage is determined by DGI regulations.

Is rental income subject to IVA?

Residential rental income is generally exempt from IVA. Commercial rental income may be subject to IVA at 15% if the landlord is IVA-registered.

How do I report rental income as an individual?

Rental income is declared on the annual PIT return filed by 31 March. You should calculate net rental income (gross rent less deductions) and add it to your total income for PIT calculation.

What happens if I don't declare rental income?

Failure to declare rental income can result in penalties and interest on unpaid tax, plus back-assessment by the DGI.

Disclaimer

This guide provides general information about Nicaraguan rental income taxation for the 2026 tax year. Tax laws and rates may change. Always consult with a qualified Nicaraguan tax advisor or the Dirección General de Ingresos for advice specific to your situation. InvestmentKit does not provide tax advice.