How to Purchase Property in The Bahamas
The costs involved in purchasing a property in the Bahamas are as follows:
Legal Fees:
A real estate transaction can not be completed without a Bahamian Attorney. Fees for closings are typically 2.5% of the Conveyed price plus VAT. There is also a small recording fee when the title deeds are recorded at the Public Registry. Buyer and Seller are normally responsible for their own attorney fees. Legal fees are also VAT taxable.
Real Estate Commission Fees:
6% on improved property plus VAT
10% on vacant property plus VAT
Government Taxes (VAT on Conveyance) on the Transfer of Property effective July 1st, 2023
For Bahamian Individuals:
Under $100K = 2.5%
$100,001 -$300K = 4%
$300,000 -$500K = 6%
$500,001 -$700,000 = 8%
$700,001 -$1 Million = 9%
Over $1 Million = 10%
For a Non-Bahamian Citizen, a 10% Value Added Tax (VAT) is charged on the property value. The usual practice in The Bahamas is for the tax to be shared equally between buyer and seller unless otherwise agreed upon.
Bahamian Owned Companies:
Under $100K = 2.5%
Over $100,001 = 10%
For a Non-Bahamian owned company, a 10% Value Added Tax (VAT) is charged on the property value.
*1st time homebuyers’ exemption for Bahamian citizens between 300K and 400K is now 4%
*For the transfer of Real Property, as of October 2022 all Conveyances must have a Real Property Tax assessment number included.
Bahamas Taxation
The Bahamas has no income tax, capital gains taxes or inheritance taxes. There is no sales tax with the exception of the government tax (value-added tax) paid on the conveyance of real property. In Freeport, Grand Bahama, properties are exempt from real property tax.
RATE OF REAL PROPERTY TAX:
Owner-occupied property (property where the owner resides)
$0-$300K = Exempt
$300K-$500K = 0.625% of the value per annum
$300K- $500K = 1% of the value per annum. The maximum tax rate is $120,000 per annum
Cap on Real Property Tax valued over $6,000,000 is $120K
Commercial Properties (more than 4 units that are not owner-occupied)
$0-$500K = 0.75% of the value per annum
$500,001 -2,000,000 = 1% of the value per annum
Over $2,000,000 = 1.5% of the value per annum
Other Real Property
Bahamian Owned: 1% of the value of improvements per annum
Non-Bahamian Owned: 1% of the value of improvements plus the amount payable on the value of the unimproved property
*Real Property Taxes are due on March 31st of every calendar year.
Exemptions
Property owned by Bahamians and situated in the Family Islands is exempt from property tax. Property approved as commercial farm land (by the Minister of Agriculture and Marine Resources, and the Minister of Finance) may be eligible for property tax exemptions.
Unimproved property owned by Bahamians, meaning property without physical additions or alterations, or any works benefitting the land which has not increased the market value thereof by $5,000 or more;
Places of religious worship; school buildings and their gardens and playing areas;
Property owned by foreign governments;
Property owned by foreign nations used for consular offices or residences of consular officials and employees;
Property used exclusively for charitable or public service from which no profit is derived.
Value Added Tax
As of July 1, 2018, the Bahamas Government has imposed a 10% Value Added Tax (VAT) on all real estate-related professional services, such as commissions and legal fees.
Financing Your Purchase
Financing Options
For Bahamians and permanent residents, most of the major banks, credit unions and life insurance companies offer mortgages with some offering terms up to 30 years and as little as 10% down.
Lending institutions do grant mortgages to foreign nationals; interest rates, restrictions and down payment requirements may vary from institution to institution. The loan facility may only be given in US$ at international rates and the down payment required is generally on the order of 40% of value.
Purchasing by Non-Bahamian Citizens
The Bahamas welcomes investment by non-Bahamians and has created a number of policy documents to facilitate the purchase of Bahamian property.
Permits are required by non-Bahamians, as provided under the International Persons Landholding Act, if:
- The property being purchased is greater than 2 acres.
- The intention is to rent out all or a portion of the property.
- The property being purchased is for commercial development.
Non-Bahamians who buy land for which a permit is not required must register their purchase with the Foreign Investment Board under such Act.
Non-Bahamians should also register their investment with the Exchange Control at the Central Bank of The Bahamas to ensure that upon resale they will be able to remit the net proceeds of sale outside the Bahamas in the currency of the original investment.
Residency & Entry Visas
Permanent Residency
The Bahamas has a liberal process for granting Economic Permanent Residency (EPR) that makes it easier for individuals to “follow their money” with respect to where they live and work. There are many personal benefits to Bahamas Permanent Residency with the main ones being The Bahamas has no capital gains taxes, capital transfer taxes, personal income tax or estate tax.
Persons with permanent residence are for all intents and purposes treated like Bahamians, except for the right to vote. Acceleration of the permanent residence application is available for persons who spend a minimum of $750,000 on a residence. For more substantive investments of $1.5 million or greater, applications will be reviewed within 21 days. Permanent Residence allows the holder to pass freely through Immigration. There is no requirement to be in the Bahamas for a minimum or maximum number of days. Spouses and children are endorsed on the permit for a one-time government fee of $10,000.
Permanent residence is a status issued to an individual for the duration of his/her life, unless revoked, and gives him/her the right to live and or work, but not the right to vote in The Bahamas.
Annual Residency
Annual residency cards are available to homeowners owning Bahamian Real Estate at any price point and can be renewed annually. The annual residency card allows the permit holder and their family to reside in The Bahamas for the duration of the permit. This card does not confer permanent residency privileges but does permit the holder to move freely through Immigration at any port of entry.
Entry Visas
Citizens of the United States of America, Canada, and the United Kingdom are not required to have an entry visa as long as their stay is less than 8-months and they can show proof of a return ticket departing the Bahamas. Visitors cannot engage in gainful employment without a permit issued by The Bahamas Department of Immigration.
Compliance Requirements
As part of a global push for increased transparency in financial dealings, The Bahamas government passed legislation in May 2018 called the Financial Transactions Reporting Act (FTRA). The new legislation ensures The Bahamas is a safer jurisdiction in which to do business, according to lists published by regulators like the Organization for Economic Cooperation and Development (OECD), the European Union, and the US-based Financial Action Task Force. The act requires real estate brokers and developers to obtain and retain certain background information from each of our clients that are buying or selling real estate in the Bahamas. This process, known as Know Your Client/Customer (KYC), is to protect the investment grade of The Bahamas and ultimately our clients, promoting high ethical and professional standards that discourage criminal activity. You will most likely be required to give the same types of documents to your law office and bank when you establish a facility at either. We appreciate your cooperation.