The Bahamas is a highly sought-after tourist and real estate investment destination.
Every year, numerous individuals choose to buy homes and properties to rent out to tourists or to live in themselves.
All the several islands of the Bahamas are all small corners of paradise that host luxurious villas, apartments, and cottages.
If you are interested in purchasing a property in the Bahamas, we recommend reading this in-depth guide on How to buy Real Estate in the Bahamas?
Keep in mind that, as in any other country, there are real estate laws and taxes that all property owners must comply with.
In this article, we will explore these regulations and taxes, guiding how they must be paid.
The Bahamas Real Property Tax
In the Bahamas, the law requires payment of real estate tax.
After billing, payment is due, and they must be made in accordance with the Real Property Tax Act.
The tax legislation of the Bahamas, known as the Real Property Tax Act, imposes an annual tax on the value of the real estate for each property owner in the country.
The Department of Inland Revenue is responsible for determining the value of the property subject to taxation.
Houses, undeveloped land, condominiums, villas, and commercial properties are all subject to the tax imposed by the Real Property Tax Act.
The tax collection must be carried out at the Bahamas Revenue Office, the government body responsible for collecting taxes.
How to request a property valuation?
To request a property valuation, the owner must fill out the following forms:
- Property Tax Valuation Request Form
- Property Tax Declaration Form
If the property is on government land and the owner resides on it, they must also fill out an Affirmation Form to request tax exemptions.
After receiving and verifying the forms, a field visit will be made to gather further information and determine the property’s value to calculate the real property tax.
The responsible department will inform the owner of their tax liability.
How to pay real property tax in Bahamas
Following the laws of the Bahamas, real property tax must be paid by the due date, which is December 31st.
After this deadline, a 5% interest will be applied to any outstanding balance.
Property owners can choose from two payment methods, including:
- Visiting one of the authorised payment offices
- Making payment through bank transfer
After payment has been made, a receipt will be issued by the relevant office.
Bahamas Historic buildings and exemptions
Owners of historic buildings or significant land spaces for the history of the Bahamas are entitled to exemption from real property tax.
Exemptions are not automatic and must be requested by filling out an application form.
Process of Requesting
The owner must fill out the form and submit it to the Department of Revenue with copies of their documents.
The Department will review the application and, if necessary, request further information and documentation.
Subsequently, an appointment for an on-site visit will be scheduled, which will be carried out in the owner’s presence.
The particular project coordination committee for the preservation of historic properties will review the application and supporting documents.
Finally, the Department will contact the applicant to inform them whether the request has been approved or not.
If approved, the owner will receive a certificate attesting that their property is exempt from property tax.
Owners of properties not eligible for exemption can contact the Revenue Department to inquire about the reason for their ineligibility.
If the request is denied, the owner must pay the standard duties prescribed by law.
Bahamas Annual Property Tax Rates
The occupying owner of a residence is exempt from taxes on the first $300,000 of the property value.
Properties occupied by owners valued between $300,000 and $500,000 are subject to an annual tax rate of 0.625% of the market value.
Properties exceeding $500,000 are subject to an annual tax rate of 1% of the market value.
Real Estate Transaction Taxes
The Bahamas’ real estate transaction tax follows a gradual VAT rate scale depending on the property value assessment.
- Transactions valued below $100,000: 2.5% VAT
- Transactions valued between $100,001 and $300,000: 4% VAT
- Transactions valued between $300,001 and $500,000: 6% VAT
- Transactions valued between $500,001 and $700,000: 8% VAT
By new laws, buyers of homes within the value range between $300,000 and $500,000 pay a 4% VAT rate.
The VAT is generally split fairly between the buyer and the seller unless there is a separate agreement between the parties.
Property tax exemption
Bahamian land properties approved by the Ministers of Agriculture as commercial agricultural land are exempted from property tax.
Also, Bahamian properties used solely for charitable or public purposes, from which no profits are derived, are exempt from property tax.
A value-added tax (VAT) of 12% is charged on real estate services such as valuations, legal activities, and commissions.
Owner’s rental license for residences
If a rental property owner intends to rent out a portion of their residence, they must apply for a rental license.
Rental licenses are available at the local administration office or the Hotel Licensing Department of the Bahamas Ministry of Tourism and Aviation in Nassau.
If you want to receive more information about the Bahamas and the world of real estate, we invite you to visit our Blog section and our properties catalog.
You will be able to discover all the extraordinary villas and apartments available for rent or sale.
