The appeal of living and working in the Bahamas are pretty obvious. The wonderful sunny weather, pristine sandy beaches and crystal clear waters are a huge draw to thousands of visitors each year.
Why wouldn’t you want to take advantage of that traffic.
The Commonwealth of the Bahamas has tax laws and regulations that help to make it that much more appealing to investors. There are especially great benefits for American and Canadian Investors. Here's all you need to know if you’re considering investing in Bahamas real estate as a money-making enterprise!
Tenancy Laws are Very Pro-Landlord
Rentals in the Bahamas are separated into two broad categories: short term (holiday or vacation rentals) vs common rentals. For both types of rentals, the rental amount can be freely negotiated between landlord and tenant, with no government restrictions placing limits on the values.
For common rentals, a security deposit is normally required, as well as an advanced payment of the first and last month’s rent. For holiday rentals, it’s common for a reservation fee of 20 – 50% to be levied to tenants. Best of all, in the case of “tenancy at sufferance”, a landlord can summon police to the residence immediately if necessary, without the court order required in many other countries.
International Persons Landholding Act
This is the law that requires all foreigners who plan to lease out their properties to register with the Bahamas Investment Authority. The fees are as follows:
- Application for registration: $25.00
- Application for permit: $25.00
- Permit: $500
- Certificate of Registration:
- $50K or less: $50.00
- Between $50K & $101K: $75.00
- More than $101K: $100.00
Annual resident permits are available and varying costs depending on the category of permit. The card allows the holder to remain in the Bahamas for the duration of the permit.
Beautiful & Incredibly Popular for Tourists
Without a doubt, the most popular place for investment is the Bahamas main island of New Providence, especially the capital city of Nassau. The most popular neighbourhoods remain Lyford Cay and Old Fort Bay. Also, the luxury communities found on Paradise Island are really starting to take flight. The luxury residences found in the Reef & One Ocean are especially popular and convenient properties.
Foreign Owned Rental Properties
Foreign Owned rental homes need to apply for an additional license to operate as a rental property. The annual taxes to run a property in this fashion are as follows:
- A property with a market value less than $250K: Exempt
- Between $250K and $500K: 0.75%
- Over $500K: 1%
Additionally, a 10% hotel guest tax will need to collected from tenants for each room available for rent.
What Taxes are Involved in the Purchase of a Home
When any property is bought or sold, Stamp Tax and Value Added Tax must be paid. This tax is split between the buyer and seller.
The required tax range are as follows:
- 2.5% Stamp Tax on all real estate transactions
- 7.5% VAT on all transactions over $100,000
- 7.5% VAT is charged on all services such as appraisals, commissions and legal fees
Annual Real Property Tax
In respect of owner occupied property Real Property Tax is charged as follows
- The first $250,000 of market value is exempt
- Over $250,000 and less than $500,000 is 3/4%
- Over $500,000 and less than $5,000,000 is 1%
- More than $5,000,000 is 1/2%
In respect of unimproved property the rates are:
- First $7,000 of market value is $100
- More than $7,000 of market value is 1 and 1/2%
In respect of any other property
- First $500,000 of market value is 1%
- More than $500,000 of market value is 2%
The vendor is responsible for real estate commission at a rate of 6% for improved property, 10% for vacant land.
Legal fees at a rate of 2.5% are payable by both the vendor and the purchaser.
Bank charges vary with the lending institution.
So, How’s the Market Anyway?
It's never been a better time to buy! Perhaps thanks to its favourable property ownership laws for foreigners, the Bahamas is often considered to be the most stable real estate market in the Caribbean. It’s been it’s been ranked #1 by Global Property Guides (GPG) long-term real estate investment ranking.
Interested in learning more about purchasing investment property in the Bahamas? We encourage you to contact ERA Dupuch Real Estate online or call (242) 393 1811 to learn from our knowledgeably local experts.