Investing in Bahamas Real Estate is the dream of many; and though the real estate market in The Bahamas is relatively stable and not prone to fluctuation, due diligence should be exercised. Here are the answers to some popular questions many seek to ensure there aren’t any unforeseen surprises when buying a property in The Bahamas:
It is important to first state that there are no capital gain, inheritance or income taxes in The Bahamas. However, there is VAT (value added tax) at the rate of 12%.
The Bahamas Government’s main source of revenue is from customs duties on all goods imported into The Bahamas. This tax may be as low as 0% as in the case of computers and computer software, and as high as 65% in the case of all non-hybrid cars, and 220% on cigars. The typical rate of duty is around 35%. The 12% VAT is applied on top of duty in most instances.
1. VAT (Value Added Tax) – Unlike standard VAT, which is charged and paid at a rate of 12% on the supply of goods and services, the VAT on real estate transactions is a graduated tax. When the value of the consideration is less than $100,000, the rate is 2.5% When the value of the consideration is $100,000 and over, the rate is 10%
*The usual practice in the Bahamas is for the tax to be shared equally between buyer and seller unless otherwise agreed upon.
* First-time Bahamian buyers may be exempted from VAT on a dwelling house or vacant land purchased for a dwelling house, up to the value of $500,000.
2. Legal Fees – Although this can vary, legal fees average 2.5% of the purchase price
The real estate commission, which for vacant land is 10% and 6% for improved property, is the seller’s responsibility unless otherwise negotiated.
It is highly advisable to engage the services of a local Bahamian attorney before finalizing the purchase of homes for sale in the Bahamas. An attorney will ensure that the documents are conscientiously prepared. Also, the attorney, with the authorization of his/her firm, gives an ‘Opinion’ on the documents of title of the property. The ‘Opinion’ serves the function of title insurance. He/she is then liable if the buyer finds any defect or discrepancy in the title. The indemnity insurance of the law firm insures the opinion of the title.
Our real estate advisors highly recommend starting with pre-qualification by two preferred banks (with exception of cash purchasers). This step will give you clarification on the value of the properties you and your advisor should search for. If you do not have a loan officer, the advisors at BE Luxury Real Estate Group have a phenomenal network of top loan officers (and attorneys) and would be more than happy to put you in touch.
The International Persons Landholding Act of 1993 ensures that non-Bahamians can purchase property in The Bahamas. However, you will need a special permit and registration if:
If you own a property that is valued at $250K (USD) or above, you are eligible for annual residency. With property valuation above $750K, owners can seek permanent residence in The Bahamas. Moreover, if you invest more than $1.5M on real estate in The Bahamas, your Bahamas Permanent Residency will be expedited.
Foreign architects can work in The Bahamas, but they need a permit to do so. Moreover, all building plans must be overseen and signed by local engineers and local architects. Only then will those plans be approved by the Ministry of Works and the Town Planning Board. It would be advisable to engage the services of Bahamian professionals to ensure a smooth approval process. You can count on BE Luxury Real Estate to help you with your property purchase in the Bahamas.