Bahamas Real Estate: Costs And Fees
In a typical real estate transaction
What is Government VAT (formerly the Bahamas Stamp Tax)?What are the real estate Legal Fees in the Bahamas?What are the Real Estate Commissions on different Bahamas real estate transactions?What is the Real Property Tax in the Bahamas?What are the real property tax exemptions?
Seller Fees will be:
Half of the VAT on the sale, Real Estate Commission plus their own Legal Fees.
Buyer Fees will be:
Half of the VAT on the purchase plus their own Legal Fees.
Here are some common questions associated with the
costs and fees of real estate transactions in the Bahamas.
What is Government VAT (formerly the Bahamas Stamp Tax?)
The Bahamas Government VAT on Property Conveyances is a graduated tax payable on the conveyance of all real property in the Bahamas. As of July 1, 2022 the following rates came into effect:
- 2.5% if value less than $100,000.00
- 4% if value is from $100,000 up to $300,000
- 6% if value is fron $300,000 up to $500,000
- 8% if value is from $500,000 up to $700,000
- 9% if value is from $700,000 up to $1 million
- 10% if value is over $1 million
- The buyer and seller conventionally split the Government VAT
Bahamian Citizens are eligible for a refund of the VAT paid in connection with construction or renovation of first time home. First time purchasers of a home may be exempt VAT where the value does not exceed $300k.
If property is purchased by a company/in a company name, the transaction will attract 10% VAT no matter what the sale value.
What are the real estate Legal Fees in the Bahamas?
Legal fees can vary, but average around 2.5% of the selling price of the property. 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 subject to 10% VAT (as are all services).
What are the real estate Commissions on Bahamas real estate transactions?
BREA standard commissions are as follows.
- Unimproved Property/Vacant Land: 10% of the sales price
- Improved property/Homes/Condos: 6% of the sales price
- Commercial property or building: 6% of the sales price
- Business: 10 % of the sales price.
Commissions are subject to 10% VAT (as are all services)
The seller is usually responsible for payment of real estate commission
What is the Real Property Tax in the Bahamas?
The payment of Real Property Tax is required by law in The Bahamas. The bill is due and payable once produced and must be paid in accordance to the Real Property Tax Act to avoid interest. Assessments are carried out by the Department of Inland Revenue to determine the value of a property and its related Property taxes.
Senior Citizens Benefit: After 250,000 exemption, a 50% discount on balance of home value not exceeding 1 million dollars. But they must be 65 years or older, have an NIB Senior Citizen’s card
Full Payment Benefit: If tax is paid by Mar 31st of any tax year, a 10% discount is applied.
Owner Occupied Property means 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.
- On that part of the market value which does not exceed $300,000 - Exempt
- On that part of market value which exceeds $300,000 but does not exceed $500,000 - 0.625%
- On that part of market value which exceeds $500,000 - 1% subject to a maximum of $120k per annum
- On that part of market value which does not exceed $500k - 0.75%
- On that part of market value which exceeding $500k but not exceeding $2 million - 1%
- Value exceeding $2 million - 1.5%
Property owned by company seeking owner-occupied exemption
The beneficial owner of such company shall submit to the Chief Valuation Officer a declaration in the prescribed form stating that such property is occupied by the beneficial owner exclusively as a dwelling house on a permanent or seasonal basis.
What are the Real Property Tax exemptions?
The following are exempt from the payment of Real Property Tax:
Historical Building Exemption: All buildings registered on the National Register of Historical Buildings are eligible for exemption from real property tax. Exemptions are not automatic and must be applied for even when a property is listed on the Historical Buildings List.
- Public places used exclusively for religious purposes.
- School buildings including their gardens, playing fields etc.
- Crown land, other than Crown land held under a lease and property of Her Majesty the Queen in right of the Government of the United Kingdom of Great Britain and Northern Ireland, excluding a Crown Leased Cay (see above)
- Property owned by foreign governments for use exclusively as consular offices or as residence for its employees.
- Property belonging to a Commonwealth country which in the opinion of the Minister of Finance is being for carrying out functions analogous to consular functions.
- Owner occupied property in respect of the first $300,000.
- Unimproved property owned by Bahamians.
- Property owned by Bahamians situate on the Family Islands.
- Property used for commercial farming.
- Property used exclusively for the purposes of charitable or public service for which no profit is derived.
- Property of National Trust.
- Improved historic property in a national register for a period of twenty years from the date of improvement.