How to retire in the Caribbean: costs, visas and more

The Caribbean offers a sunny oasis for retirees. With the laid-back lifestyle, affordable healthcare, and tax incentives, retirees are drawn to the Caribbean islands. But before you throw your winter clothes away and spend your golden years under a palm tree, you need to understand what it entails to retire in the Caribbean. In this article we’ll discuss immigration laws, taxes, safety and other key factors for four of the most popular Caribbean retirement destinations: Bahamas, Belize, Jamaica and the Dominican Republic.


Getting a Visa in The Caribbean

There are 26 countries in the Caribbean. Each one has a unique culture. The countries there variously speak English, Spanish, French, Creole and other languages, and many have their own currencies. Some are territories of European nations, and some are independent.

As you might imagine, then, each island has unique visa restrictions.

To get a retirement visa in the Bahamas, there are a couple of options. The first is to purchase a property in the Bahamas worth over half a million U.S. dollars, then apply for permanent residency. The second option is to purchase a property in the Bahamas then apply for an Annual Homeowner’s Card. This will allow you and your family to stay in the country throughout the year. The annual fee for this card is $500.

In Belize, retirees must be 45 years old to apply for the Belize Retired Person’s Incentive Program (QRP). QRP’s must move $2,000 per month into a Belizean bank account, have proof of a pension or Social Security, and have adequate funds to stay in the country. The QRP fee is $150, plus a $1,000 payment to the Belize Tourism Board and a final $200 payment for the card. The card is renewable annually for $25. To renew your card, you must spend at least one month in Belize per year and may come and go from Belize as you please. 

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31 tax credits and deductions that could save you thousands


That higher standard deduction makes it difficult to put together enough charitable deductions to make it worth itemizing. But if you do make large contributions, the threshold for deductions has jumped from 50 percent of adjusted gross income to 60 percent. While it's too late to make charitable donations for 2018, Kibler suggests tracking down receipts for donations made throughout the year, especially of cash or goods. Giving to eligible nonprofits, religious organizations, and government organizations (such as a school or public library) are deductible. "If you dropped off a bag of clothing at a local charity or gave them $5 at the cash register of your grocery store, make sure to track these contributions so you get the highest tax benefit possible," Kibler says.


The passage of the Tax Cuts and Jobs Act in 2017 almost doubled the standard deduction in 2018, pushing it from $9,350 for those filing as head of household to $18,000. But it also eliminated a bunch of helpful credits and deductions, including the personal exemption, which was $4,050 in 2017.


While tuition and fees deductions have dried up, the American Opportunity Tax Credit remains an option for eligible students — not grad students or long-term undergrads; it's available only during the first four years of college — with at least half-time status at an accredited school. It covers all of the first $2,000 in expenses and 25 percent of the next $2,000 (for a total $2,500). Schools will send students a 1098-T showing the amount paid last year in tuition and fees, but even expenses including books, supplies, and equipment such as computers can be offset. If the 1098-T does not max out the allowed credit, hold onto those receipts for supplies.


This is the tax credit for the older student. Anyone taking classes at an eligible educational institution to acquire or improve job skills is eligible, even students taking just one class well after four years of undergraduate education. There are limits: Students are credited for only 20 percent of $10,000 in expenses ($2,000 is the maximum), though it can be applied to tuition, fees, books, supplies, and equipment. Individuals with an adjustable gross income between $56,000 and $66,000 (or between $112,000 but less than $132,000 for married filing jointly), will get a reduced amount. If it's over those thresholds, you can't claim the credit at all.


If you bought a home and had the mortgage in place before Dec. 15, 2017, you are still eligible to deduct interest on up to $1 million in mortgage debt. If you happened to sign on that date or later, though, your threshold drops to $750,000.



If you or your family have health insurance from a government-run marketplace built through the Affordable Care Act, you may be eligible for this credit. Income is limited to up to $48,560 for individuals and up to $100,400 for a family of four, but the credit is usually equal to the cost of the second-lowest silver plan. Taxpayers can get this credit in advance to offset monthly premium bills, but claim too much and it must be paid back when filing. Those who get too little can claim the remainder when submitting returns.


If a child does not qualify for the Child Tax Credit because they are over 17, they may still be eligible for a $500 credit under new tax laws. The credit also applies for dependents who are elderly or disabled.


Those who took advantage of the child tax credit in 2017 could claim a $1,000 credit on their income tax return for each child under 17 who qualified. In 2018, that doubles to $2,000 per qualifying child. The credit was also nonrefundable in previous years, but can now be refunded to 15 percent of earned income over $2,500, or up to $1,400. To qualify, children have to be 16 years or younger on the last day of 2018, be related to you, claimed as a dependent, be a documented U.S. citizen or resident, have lived with you for half of the tax year (though absences related to school, vacation, military service, and medical care are exempt) and must not provide more than half of his or her own support. The credit phases out for married taxpayers filing jointly with an income of $400,000 (or $200,000 for all other taxpayers).


The Earned Income Tax Credit is for low- and moderate-income taxpayers with "earned income" such as wages, salaries, or self-employment pay (but not Social Security, unemployment, or investment income). The limits are strict, ranging from $15,270 for a single person with no children to $54,884 for a married couple with three children or more. The credit's value is worth $519 to $6,431 depending on filing status and number of dependents, but requires recipients to have less than $3,500 in investment income for the year.


Whether it's through an employer or private plan, a traditional Individual Retirement Arrangement funded with pretax money — unlike a post-tax Roth IRA — is deductible up to a certain limit. Even if an account is opened and funded in 2019, any contributions made before the tax-filing deadline can be credited to the previous year. For 2018, the maximum contribution is $5,500 (or $6,500 for those 50 or older). There are also deduction limitations depending on the taxpayer's income and access to an employer-sponsored retirement account.


Students can still deduct up to $2,500 for interest paid on student loans — but get less if median adjusted gross income exceeds $65,000 ($135,000 for joint returns) and nothing if it's $80,000 or more ($165,000 or more for joint returns).


Taxpayers 65 or older — or younger but retired or on permanent and total disability — may be eligible for a credit. Taxable income must be below $17,500 (or $20,000 if married and filing jointly) and nontaxable Social Security, pension, or disability benefits must be below $5,000. If both partners qualify and file jointly, the income limits are $25,000 for taxable income and $7,500 for nontaxable benefits. The credit itself ranges between $3,750 and $7,000.


It isn't much, but the Savers Credit gives back to low- and moderate-income people who contribute to a qualified retirement account. Taxpayers can get a credit for 10 percent, 20 percent, or 50 percent of the first $2,000 contributed, depending on income and family size. To get the minimum 10 percent, the maximum allowed income is $31,500 for single filers, $47,250 for the head of a household, and $63,000 for joint filers. Also, beginning this year, beginning in 2018, if you're the designated beneficiary you may be eligible for a credit for contributions to your Achieving a Better Life Experience account for persons with disabilities.


A longtime friend to small-business owners and freelancers, the Simplified Employee Pension IRA offers higher contribution limits than a traditional IRA. As their own employer, business owners and freelancers can contribute up to 25 percent of their annual income or $55,000, whichever is lower. As with a traditional IRA, contributions made before the tax-filing deadline (without an extension) can be applied to the previous year.


Taxpayers who get a Qualified Mortgage Credit Certificate worth up to $7,500 from a local or state government may be able to claim the Mortgage Interest Credit. The home must be the taxpayer's primary residence, and interest payments can't go to a taxpayer's relative. The credit is worth up to $2,000, and unused portions may be carried forward to the following year.


You can get a larger deduction for medical expenses in 2018 by doing absolutely nothing. Until recently, taxpayers 65 years or older could deduct total medical expenses that exceeded 7.5 percent of their adjusted gross income. Even married couples that included one person 65 or older were eligible, but younger, single taxpayers could deduct only medical expenses that exceeded 10 percent of their AGI. For 2017, that threshold was slated to jump to the 10 percent of AGI for everyone, including those over 65; the recent tax reform set the threshold for everyone at 7.5 percent of gross income and made it retroactive to 2017. It stays in place for 2018, but will go back to 10 percent of AGI in 2019.


Unfortunately, taxpayers can't just set one of these up before the tax deadline and save some cash. The one-participant 401(k), or solo or self-employed 401(k), requires you to file for a federal Employer Identification Number and set up the account by Dec. 31. But once a solo 401(k) is established, taxpayers can make contributions right up to the tax-filing date in April (or mid-October, with an extension). Total contributions can't exceed $55,000, but that's still nearly four times the maximum employee contribution to a standard 401(k) of $18,500.


If you bought new office furniture, computer servers, cranes, end loaders, cattle, trucks, or taxis for a business last year, you may be able to write off more from them than you thought. Even if you built oil derricks, warehouses, office space, or utility plants after Sept. 26, 2017, the bonus depreciation you could claim on the first year of owning those assets increased from 50 percent just a day before to 100 percent "expensing" from Sept. 27 onward. Recent tax changes also extended bonus depreciation from items bought or built new to both new and used assets. That "expensing" applies to productions (qualified film, television, and/or staged performances) and even certain fruit or nuts. The law also increased the maximum deduction from $500,000 to $1 million, with the phase-out threshold increasing from $2 million to $2.5 million.


Self-employed people can deduct 54.5 cents a mile driven for business purposes the previous year; the rate goes up to 58 cents in 2019. That said, detailed mileage logs are required. Writing down the miles driven (odometer readings at the beginning and end of the trip help), the date, the business purpose of the trip, and the destination should be adequate. Taxpayers can also take a 18-cent-per-mile deduction for eligible miles driven for medical purposes in 2018, up from 17 cents in 2017 (and it's 20 cents in 2019). The standard mileage rate for charitable activities is unchanged at 14 cents. Moving expenses, however, no longer qualify for a deduction.


This one is tricky, as simply working on the couch or at a kitchen table doesn't cut it. A home office has to be a dedicated space for working and meeting clients and customers. Furthermore, office-related utilities including telephone, internet, and even heat and electricity have to be parsed out separately. You can try to determine which portion of a home's expenses, taxes, insurance, and depreciation is dedicated to a home office; a simplified version multiplies the square feet of the room by $5 (if the total size is 300 square feet or smaller). That said, you can only get this deduction if you're self-employed: It disappeared for employees in 2018.


Under tax changes, deductions for state and local taxes (property tax and sales or income tax) are capped at $10,000 from 2018 through 2025. If your total state and local taxes and property taxes are typically more than the $10,000, there's no way to increase the deduction. The new tax law prohibited prepaying 2018 state and local taxes that were not imposed in 2017.


You may be able to take a tax credit of up to $13,810 for qualified expenses paid to adopt a child in 2018. Those expenses include adoption fees, court costs, attorney fees, travel expenses (including amounts spent for meals and lodging), and readoption expenses for a foreign child. Those credits apply to adoptions of anyone under 18 years old or physically or mentally incapable of taking care of themselves. If your modified adjusted gross income is more than $207,140, the credit is reduced; those with MAGI of $247,140 or more can't take the credit.


Despite fears it would be eliminated, this credit still offers buyers of electric or plug-in hybrid vehicles up to $7,500 for the purchase. While this credit isn't going to be around forever, it's still a formidable tool for boosting sales of these fuel-efficient vehicles in spite of low gas prices and the market's hunger for less-efficient SUVs.


If you paid or accrued income tax in a foreign country or U.S. possession in 2018, you can use it as a credit against U.S. income tax. If you already exclude foreign earned income, foreign housing costs, foreign possessions, or income from Puerto Rico exempt from U.S. tax, you aren't eligible. Also, your foreign tax credit can't be more than your U.S. tax liability multiplied against a fraction made up of taxable income from outside the United States and total taxable sources.


Most people who sell a home know that, if they've sold at a gain, they may exclude up to $250,000 of it if single or $500,000 if married filing jointly. Granted, you actually had to live in that home for two of the past five years (military, foreign service, and intelligence personnel are exempt). What most homeowners don't realize is that the gain isn't only on the sale price of the home, but on improvements made, real estate agent sales commissions, closing costs, recording fees, and survey fees. Kibler suggests keeping clear records of all of it in case of an audit and to keep a big chunk of the gain tax-free.


If you live in a foreign country for at least 330 full days out of the year, you can have up to $104,100 of your salaries, wages, professional fees, and other amounts you get as an employee excluded from federally taxable income. You may also exclude amounts your employer pays for rent, furniture rental, parking, or other items.


The IRS will allow taxpayers to make tax-free contributions and withdrawals from Health Savings Accounts as long as they go toward qualifying medical expenses. High-deductible health plans — with premiums ranging between $1,350 and $6,650 for singles and $2,700 and $13,300 for families — allow taxpayers to contribute up to $3,450 for single filers or $6,900 for families to HSAs without any tax implications.


The Nonbusiness Energy Property Credit covers materials that meet the efficiency standards of the Department of Energy. This includes home insulation, exterior doors, exterior windows and skylights, some roofing materials, electric heat pumps, various water heaters, central air conditioning, biomass stoves, furnaces, boilers, and advanced circulation fans. You can claim 10 percent of the minor improvements or 100 percent of the big ones, but you'll get only a maximum $500 credit for all years of improvements combined. It also sets credit limits for windows ($200), boilers ($150), fans ($50), and bigger jobs ($300).


If you're thinking about going solar, installing a small windmill, looking into geothermal heat, or experimenting with fuel cells, there's tax incentive to do so. You can get a 30 percent rebate on any of the above, but act quickly. If you don't install it by the end of 2019, the rebate drops every year until 2022.


In previous years, a taxpayer could get a deduction for any mishap that occurred in their home. But starting in 2018, the damage must have occurred during a federally declared disaster for a taxpayer to get that same deduction. This deduction may return in full in 2025, but for now it's limited to disaster areas.


The self-employed, including those with freelance income, can write off educational expenses for workshops, webinars, books, or other material that maintain or improve skills. While educational expenses to meet the minimum requirements of a trade or business — or related to getting into a new line of work — don't qualify, refresher courses, courses on current developments, and academic or vocational courses would. The deduction is the amount by which qualifying work-related expenses is greater than 2 percent of adjusted gross income.


In Jamaica, Americans can stay for up to six months without a visa. To stay longer, you’ll need to apply for residency status. As part of your application, you’ll need your passport, evidence that you can financially support yourself without working and a completed application form, which you can find at the Jamaican consulate. If you prefer, you can also apply for your residency status through the Jamaican consulate while you’re still in the U.S. This is probably the safer plan: While plenty of Americans obtain permits for retirement, receiving one isn’t a guarantee

The Dominican Republic offers a special visa for retired people that provides tax benefits, provided they have an income of $ 1,500 per month. That income can come from a private or government pension, such as Social Security. Upon approval, applicants get permanent residency status. Plan for the application process to take between one and two months.

There are many other countries to choose from in the Caribbean. For example, France, the Netherlands, and Great Britain all have territories in the Caribbean that adhere to the countries’ European laws. It’s important to note that France and the Netherlands are part of the European Union and Schengen Zone, so any time spent in their offshore territories counts as time spent in the European Union, and visa laws in the Caribbean are the same as retiring in the actual countries.

Cost of Living in the Caribbean

Understanding the cost of living is one of the most important factors when planning for retirement. In Belize, where the overall cost of living is 29% lower than in the U.S., rent is about 45.06% lower than the United States according to, a cost of living calculator. The national average for a one-bedroom apartment in the city center of Belize City is about $317. This is compared to the national average of a one-bedroom apartment in the U.S. is about $1,360. However, it’s important to note that most retirees do not stay in Belize City. Instead, they head for Ambergris Caye or other small paradise-like islands. In Ambergris Caye, the average cost of a one-bedroom apartment is about $515 per month.

In the Bahamas, where the overall cost of living is about 16% lower than in the U.S., rent is about 9.77% lower than in the United States according to The national average for a one-bedroom apartment in a city center of the Bahamas is about $905 per month. In Nassau, the most prominent retiree destination, the average rent for a one-bedroom apartment is $943.

In Jamaica, the overall cost of living is about 20% lower than in the U.S. If you’re looking to live on Jamaica’s coast, houses in port towns like Ocho Rios or Port Antonio are typically less than $200 per square foot. If you’d prefer to live in the city, a one-bedroom apartment in the center of Kingston will cost around $530 per month, according to the pricing data website Numbeo. On average, renting in Jamaica will cost you between $250 and $500 a month, and properties for sale will range between $150 and $215 per square foot.

The cost of living in the Dominican Republic is nearly 40% lower than in the U.S. Rent in the nation is about 75% cheaper in the U.S. Ex-pats can live in the Dominican Republic on a monthly budget of $1,000, with some $300 and more to rent a two-bedroom apartment or small villa close to town. Utilities will run about $150 each month.

Housing in the Caribbean

Houses in the Port of St John`s, Antigua and BarbudaForeign residents and Nicaraguan residents can purchase property in both Belize and the Bahamas. Other similarities between buying homes in the two countries are that both countries speak English, there are few restrictions on foreigners buying property, and there is no capital gain tax when you sell your property.

In Belize, the home-buying process begins with you choosing a home and negotiating with the owner a price. Then, you will put a deposit down on the home and hire a lawyer for a title search and to request a survey plan. The lawyer fee is typically about 1-3% of the sale price of the home. Once all the documents have cleared, you pay the seller. Mortgages are available. Finally, you’ll pay the stamp duty of 5% and transfer the title to your name.

In the Bahamas, buying a home is a clear path to residency status and is the same process as in the United States. When someone purchases a home, there is a stamp tax of 10% paid to the government by the seller. There are other fees involved that vary including an inspection fee and a lawyer’s fee, and they are like what you would pay in the U.S.

Ex-pats may buy property in Jamaica. The process is simple: Find a residence you’d like to purchase; make an offer to the seller; upon acceptance of your offer hire a real estate attorney to do a title search and prepare an agreement of sale; upon signing, you’ll need to pay a deposit of 10% to 20%; pay an assortment of duties, fees and taxes.

In the Dominican Republic, real estate transactions are often all-cash deals. Typically, funds are transferred for the sale to your lawyer’s escrow account in an American bank, and later disbursed by your lawyer to the seller. While mortgages do not exist in the country for foreigners or in special cases only, there are occasions where the seller is willing to offer financing.

Taxes in the Caribbean

In general, the Caribbean is known as a tax haven for ex-pats. A tax haven is a country that imposes low or no taxes on individuals and businesses. Many Caribbean countries have a 0% tax rate and a low annual business license fee and substantial financial privacy. As a result, many Caribbean islands are equally as advantageous to live in and purchase property in as Belize and the Bahamas.

In both Belize and the Bahamas, there is no capital gains tax, and residents do not pay taxes on their income from outside of Belize. As a U.S. citizen, you will be expected to file taxes in the United States each year. You will have to report any foreign bank accounts as well, and you will likely have a bank account in your country of residence.

Jamaican residents are taxed on their global income at either 25% or 30% on income above a tax-free threshold. Ex-pats living in Jamaica are considered residents for tax purposes if they spend at least six months in the country in the tax year or if they have a home in Jamaica and they visit Jamaica at all in the year, or if they visit Jamaica “habitually,” defined as at least three months a year for four consecutive years. Jamaica does not tax pension money, whether government or private.

Tax rates in the Dominican Republic are progressive and capped at 25%. Three years after you gain residency in the country you will be required to pay the island nation’s taxes on your global income. Non-cash compensation is considered taxable, as are capital gains. Finally, the nation has a 16% value added tax.

If you earn any money outside of the U.S., you can use a few different provisions to reduce your U.S. taxable income. These include the foreign earned income exclusion, the foreign tax credit and the foreign housing exclusion, among others. If you’d like to forecast your tax burden more specifically, you may want to consult with a tax expert who is familiar with both the U.S. and your country of residence’s tax laws.

Healthcare Systems in the Caribbean

Belize has both a public and private health system. Belize’s public system is not generally up to American standards, so many ex-pats leave Belize to travel to Mexico for healthcare. The government subsidizes medical trips to neighboring countries, but patients often still must pay quite a bit for medical care out-of-pocket. If you choose to use the private healthcare system, you will have to pay for your care out-of-pocket or with private insurance. If you have unexpected health issues, this could end up being very costly.

The health system in the Bahamas is known for providing a high quality of care. The larger islands of Grand Bahama and New Providence have several hospitals, and the smaller islands have clinics with limited services. Private international insurance is recommended because while free care is provided to all residents, foreign citizens can’t contribute to the national health insurance program. This means that anything more than basic care can be costly.

The World Health Organization (WHO) ranks the healthcare system of Jamaica as the 53rd best out of nearly 200 nations. Public hospitals are routinely overcrowded, leading to notoriously long wait times. There is at least one hospital in every parish in Jamaica, but the largest and best-equipped facilities are in Kingston and Montego Bay. Even in these largest cities, though, serious medical conditions often require evacuation to facilities in the U.S. Ex-pats are encouraged to use private facilities in Kingston or Montego Bay.

The Dominican Republic’s healthcare system ranks 51st on the WHO list. There are four types of facilities in the country: public hospitals; tourist area clinics; private clinics; and major public/private hospitals. There are three tiers of healthcare funding in the country: government funded for poor and indigenous people; privately funded by employers and their workers; and a combination of government and private funding. The U.S. embassy lists medical facilities and resources on its website.

Safety in the Caribbean

The safety of Caribbean islands varies widely. Some islands, such as Jamaica, have a problem with crime, and the U.S. State Department has issued a warning about this. It also has issued a warning about the Dominican Republic. The most dangerous place in the Caribbean may be Haiti, which drew a Do-Not-Travel warning from the State Department because of widespread kidnappings and armed robberies. At the other end of the safety spectrum are the Caymans, Anguila, the Netherlands Antilles, St. Maarten and Monserrat.

The weather can be a safety issue. The area sees hurricanes most years in the fall, and some of these storms result in injuries and fatalities, as well as diseases in the aftermath. The U.S. Centers for Disease Control keeps an updated database about any diseases and other risks on areas in the Caribbean.

Bottom Line

The Caribbean has many islands and locales to choose from when deciding where to retire. Although this article focused on popular destinations like Belize, the Bahamas, Jamaica and the Dominican Republic, other options include the U.S. Virgin Islands, the island of Roatan in Honduras, or some of the Dutch islands. Regardless of where you choose to retire, you should go in knowing details about taxes, healthcare, safety and more.

Tips for Achieving Your Retirement Goals

  • A financial advisor can help you sort out your retirement plans. Finding the right financial advisor that fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in 5 minutes. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now.
  • It’s tough to plan for your retirement if you aren’t sure what kind of costs you’ll have when you retire. To get an idea of what to expect, stop by our retirement calculator. To use this, you’ll need a few details about where you want to retire, when you want to retire and how much you have in savings.

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The post How to Retire in the Caribbean: Costs, Visas and More appeared first on SmartAsset Blog.

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