Buying Bahamas Real Estate
Everything you need to know about buying real estate in The Bahamas
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Buying Bahamas Real Estate
The Bahamas is no longer just a vacation destination, as many international real estate investors with significantly high-net-worth are now choosing The Bahamas as their primary residence. So I am sure that you may be curious about buying Bahamas Real Estate.
Who Buy Homes in The Bahamas
You will find a that the Bahamas second home market is a mixed of international persons from around the world including, Britain, western Europe, Canada, the United States, France, Switzerland, Brazil, Argentina, South Africa and Mexico.
With American and Canadians being the most popular residents, owning vacation homes.
Checkout the answer to the questions, "Can a foreigner buy a house in The Bahamas?"
While there are 700 Islands and 2000 Cays that makes up The Bahamas Island chain most buyers particulary like to purchase in Nassau, New Providence and Paradise Island. Where, mega and new resort hotels, like Atlantis Paradise Island and Baha Mar on Cable Beach, offer fully furnished turnkey residences that can be easily placed into their rental pool, providing the added benefit of a secondary income.
And with more full-service luxury condos with world class amenities including marina, restaurants, commercial office space and residence, being built, you are sure to still find your ideal piece of paradise in The Bahamas.
Why buy a home in the Bahamas
The short answer would be its wonderful climate, stable government, proximity to the United States and Canada and low taxes but I feel this video best answers the questions for you and why you would likely be asking "How can I buy a home in The Bahamas?"
Click to watch the video - Why Buy a home in The Bahamas
The Cost of Buying Bahamas Real Estate
The transactional cost of buying real estate in The Bahamas has increased with the introduction in July 2018, of a value-added tax of 10 percent which was added and is split between buyer and seller; the VAT also applies to legal fees, appraisals and title search fees.
The Government tax on the conveyance of real property is a graduated tax. The total amount of the tax is calculated as follows:
- Purchases with a value under $100,000.00 are assessed at 2.5% of the purchase price.
- When the value of the purchase is $100,000 and over, the rate is 10%
- Purchases with a value over $100,000.00 are assessed at 10% of the purchase price.
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 purchasers will be exempted for their portion of the value added tax payable on conveyance, i.e. 5%. The exemption is applicable on a dwelling house or vacant land purchased for a dwelling house up to the value of $500,000.00
The Real Estate broker’s commission is 6 percent on homes and 10 on vacant land and is paid by the seller. There are also the legal fees which is typically 2.5 percent of the sale price, and we recommend that a Bahamian lawyer be engaged to handle your transaction because of familiarity with land laws.
Although not a requirement, Title Insurance is avaibale in The Bahamas and we strongly recomend that you get it. The risk premium generally runs between .20% - .27% of value.
Real Property Tax
The taxable value of your property is based on the latest selling price. And for undeveloped land, you are responsible for reporting the value of the improvements as you make them to the property.
A 10% reduction on the tax will be granted if taxes are paid in full on or before March 31st in any year. If taxes are paid late, the taxes attract a surcharge of 5% per annum.
Real property taxes are assessable on all real estate in the Bahamas unless the owner is exempt. All property must be declared at the Department of Inland Revenue (a division of the Ministry of Finance) in order to be assessed.
Bahamians are not required to pay real property taxes on undeveloped land, or on real estate in the Family Islands. Non-Bahamians are required to pay taxes on all real estate interests in The Bahamas.
Property taxes are typically billed in mid-October and are due by 31st December, for the following year. The Department of Inland Revenue has reserves the right to appraise and re-assess the value of any property that it deems to have increased in value. Effective July 1, 2019, the statutory maximum annual real property tax for owner-occupied properties is $60,000.
The rates are as follows:
On owner-occupied properties:
- First $250,000 - Exempt
- Between $250,000 to $500,000 - 3/4 of one percent.
- On the portion over $500,000, the tax rate is 1% of the market value of the property.
On vacant land (owned by non-Bahamians):
- First $7,000 of market value -$100
- More than $7,000 - 2% of the market value
For commercial/other improved properties:
- First $500,000 of market value - 1% of the market value;
- On the portion over $500,000 - 2% of the market value.
Effective July 1, 2019, “owner-occupied property” has been redefined as property occupied by a person who being the owner in fee simple or a mortgagor in possession occupies and resides in such property exclusively as a dwelling house on a permanent or seasonal basis. The previous requirement that the property had to be occupied by the owner for 6 months or longer has been removed.
Residency in The Bahamas
Another benefit of buying Bahamas real estate is the ability to apply for permanent residency. The purchase of real estate property in the amount of $1.25 million or more entitles a buyer to a fast-tracked residency card; and a purchase of at least $750,000 allows you to apply for permanent residency.
There are two categories of permanent residency:
- Permanent residency with the right to work and
- permanent residency without the right to work.
Once you own property in The Bahamas, you may apply to the Director of Immigration for an annual homeowner’s residence card.
This card is renewable annually and entitles you, your spouse and any minor children endorsed on the card to enter and remain in The Bahamas for the validity of the card and facilitates your entry into The Bahamas with minimal paperwork or formalities.