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Island Living – Buying property ins and outs

Island Living – Buying property ins and outs

Buying property and living in The Bahamas

Published:
Date:
Updated:
The Bahamas Investor Magazine
June 21, 2010
June 21, 2010

Buying property in The Bahamas is easier and safer than you may think. The International Persons Landholding Act of 1993, amended in 2007, makes it a breeze for non-Bahamians and companies under their control to buy real estate without risk. As well, The Bahamas Vacation Plan and Timesharing Act, 1999, protects vacation home owners.

You don’t have to be a resident of The Bahamas to buy a home or land here, whether the property is for your own use or an investment. Real estate is held freehold, which grants owners permanent and absolute tenure of the property, so it may be used, sold or assigned in a will without any restrictions.

Overseas investors may purchase residential properties of up to five acres without government approval. However, these acquisitions must be registered in accordance with the International Persons Landholding Act.

When looking for and buying property in The Bahamas, it’s important to deal with a realtor accredited by the Bahamas Real Estate Association (BREA). These agents are well trained to help you work through the steps required to conclude the purchase, including recommending a lawyer and a local bank, several of which offer loans to foreign nationals, whether they are a resident of The Bahamas or not.

It’s important to know that the government collects a one-time stamp duty on mortgages at a rate of 1 per cent of the amount borrowed.

As in any jurisdiction, there is a certain amount of paperwork to do. A non-Bahamian who buys or acquires an interest in a property to be used as a single-family dwelling, or for the construction of such, must apply to the secretary to the Bahamas Investment Authority (BIA), Office of the Prime Minister, to register the purchase.

An application for a certificate of registration (Form 1) must be filed with BIA along with proof of ownership (for example, a signed and dated conveyance), payment of stamp duty and real property tax and an original receipt from the Treasury Department showing proof of payment of $250.

A permit is required if the property to be purchased is five acres or more of contiguous land. A permit is also required if the property in question is not to be used as a private residence or is not intended for development as such.

All applications for permits (Form 3) should be submitted to BIA. If favourably considered, an approval letter is issued, a payment of the $500 fee is made to the Treasury Dept and the original receipt is returned to BIA. The permit is then issued by the secretary to the Board.

A certificate of registration or a permit (with acquisition documents) must be recorded by the Registrar General’s Dept.

Other fees and taxes are charged for the purchase of property in The Bahamas. One is a government stamp tax, a one-time payment due at closing, which is usually split 50/50 by buyer and seller, unless otherwise agreed.

Government stamp duty for property conveyances or realty transfers is as follows:
$0-$20,000…2%
$20,000.01-$50,000…4%
$50,000.01-$100,000…6%
$100,000.01-$250,000…8%
Over $250,000…10%

A first-time homebuyer may apply for an exemption to the Government Stamp Tax.

The seller pays the real estate agent’s commission, based on the total gross sales price, which is 6 per cent for improved property (residential or commercial) and 10 per cent for undeveloped land.

In the Out Islands, the fee is 6 per cent for developed property and 10 per cent for undeveloped land. In Grand Bahama, the agent’s commission for all types of property sales is 15 per cent.

Fees for an attorney’s services, the seller pays this fee, including title search and permits are:
$0-$500,000…2.5%
$500,001-$1 million…2%
$1,000,001-$4.99 million…1%
$5 million plus…0.5%

Residency permits
Non-Bahamians who wish to reside in The Bahamas on an annual basis may qualify under one of four categories, subject to a formal application and approval process.

These include: 1) the spouse or dependent of a citizen of The Bahamas and 2) the spouse or dependent of a permit holder.

The other categories are for 3) an independent economic resident and 4) a resident homeowner or seasonal resident homeowner.

In the case of an independent economic resident, the applicant must provide a financial reference from a reputable bank verifying economic worth and two written character references. For an annual residence permit under this category, a head-of-household pays $1,000
and each dependent $25.

A resident homeowner may apply to the director of immigration for an annual homeowner’s residence card, which is renewable and entitles the owner, spouse and minor children to enter and remain in The Bahamas for the period specified on the card. The fee is $500. The card is intended to facilitate entry into The Bahamas with minimal formalities.

It’s important to realize that these permits and cards do not permit the owner, spouse or dependents to be employed in The Bahamas.

The government also offers accelerated consideration of applications for annual or permanent residence to major international investors and owners of residences valued at $500,000 or more.

Property tax
Bahamians and non-Bahamians owning real property in The Bahamas must pay property tax. Returns are due on or before Dec 31 each year and are filed with the Chief Valuation Officer and paid to the Treasury Dept. Tax rates are as follows:

Owner-occupied property (residential):
• The first $250,000 of market value…Exempt
• More than $250,000 and less than $500,000…3?4%
• $500,000 to $5 million…1%
• More than $5 million of market value…1?4%

Vacant land owned by non-Bahamians:
• First $3,000…$30
• More than $3,000 and less than $100,000…1%
• More than $100,000…11?2%

All other properties/commercial:
• First $500,000…1%
• Amount over $500,000…2%
(Market value is the amount the property would realize if sold on the open market without any encumbrances or restrictions.)

On Grand Bahama Island, no property taxes are collected from owners of properties located within the Grand Bahama Port Authority area of Freeport/Lucaya, but an annual fee is levied for trash removal, street maintenance and landscaping services.

Helpful contacts
Bahamas Chamber of Commerce:
Shirley St and Collins Ave, PO Box N-665, tel (242) 322-2145, e-mail info@thebahamaschamber.com, www.thebahamaschamber.com

Bahamas Real Estate Association (BREA):
10 Dowdeswell St, PO Box N-8860, tel (242) 356-4578 or (242) 325-4942, e-mail junebrea@coralwave.com, www.bahamasrealestateassociation.com

Bahamas Bar Association:
Elizabeth Ave, PO Box N-4632, tel (242) 326-3276, www.bahamasbarassociation.com

Association of International Banks & Trust Companies (AIBT):
Goodman’s Bay Corporate Centre, West Bay St, PO Box N-7880, (242) 356-3898, e-mail info@aibt-bahamas.com, www.aibt-bahamas.com

Central Bank of The Bahamas:
Frederick St, PO Box N-4868, tel (242) 302-2600, e-mail centralbankbah@batelnet.bs, www.centralbankbahamas.com

Bahamas Investment Authority (BIA):
Office of the Prime Minister, Sir Cecil Wallace-Whitfield Centre, West Bay St, Cable Beach, PO Box CB-10980, tel (242) 327-5826/8 or (242) 327-5940/44, www.bahamas.gov.bs

Immigration Dept:
Main office: Hawkins Hill, PO Box N-831, tel (242) 322-7530/32 or (242) 322-8504, www.bahamas.gov.bs

Registrar General’s Dept (Civil Registry):
Apsley House, Frederick St, PO Box N-532, Nassau, tel (242) 323-0596, www.bahamas.gov.bs

Treasury Dept:
British American House, George St, PO Box N-7524, tel (242) 322-4561/5, www.bahamas.gov.bs

Lands & Surveys Dept:
Bay and Armstrong Sts, PO Box N-592, (242) 502-1200, www.bahamas.gov.bs

Professional Architects Board:
143 Nassau St, PO Box CB-13040, tel (242) 326-3114, e-mail bdmanager@coralwave.com, www.bahamasarchitects.com

The Bahamas Institute of Chartered Accountants (BICA) was incorporated August 6, 1971, to regulate the practice of public accounting

One-time purchase buys peace of mind

The Bahamas Investor
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