Buyer's Guide
Purchasing real estate is one of the most important decisions someone can make in their lifetime. We at Paul Ritchie Real estate recognize the importance of being well informed prior to making any commitments. The following information is provided for your understanding of investing in The Bahamas. We are always ready to help you and take pride in our approach to sales and invite you to experience the difference.
Q. What are the costs involved in buying property?
Other than your binder deposit, you will need to set aside funds to pay your closing costs, which are generally as follows:
Subsequent to the implementation of VAT, the Stamp Duty rate changed to a flat 2.5% with a 7.5% VAT being charged in lieu of the former Stamp Duty rate on transactions above $100,000.
The VAT Rule notes that first time homeowners who are exempt from Stamp Duty will also be exempt from VAT.
Consider the following examples:
Property Value Tax Payable Pre-VatTax Payable Post-VAT
$ 80,000 8% Stamp Duty 2.5% (2.5% stamp duty + 0% VAT)
$150,000 10% Stamp Duty 10% (2.5% stamp duty + 7.5% VAT)
$500,000 (first home owner) 0% Stamp Duty 0% (0% stamp duty +0% VAT)
Q. What is involved in a Real Estate Transaction?
Real estate transactions usually begin with all parties concerned: the purchaser, the vendor, their respective attorneys, and the Realtor. The transaction includes an accepted purchase offer, with a subsequent deposit placed with the real estate professional as stakeholder. A conveyance is drafted by the seller’s attorney setting out the transfer of the land. An attorney will be hired by the buyer of property to determine the legitimacy of the title and check for encumbrances to the title. (A break in the chain of title owners or missing abstracts will reduce the marketability of subject property). It is the responsibility of the buyer’s attorney to stamp and record the conveyance and any other documents, such as a mortgage or debenture, which may be associated with the transaction. The vendor's attorney will then issue a copy of the conveyance, which is held in escrow pending the completion of the sale. Upon approval of the conveyance, the sale wraps up with the conveyance executed and the balance of the agreed purchase amount paid to the vendor.
The registration of the purchase must be applied to the Office of the Prime Minister. The application should be submitted together with a copy of the conveyance (proof of ownership), and evidence of payment of Stamp Duty and Real Property Tax. A Bankers Draft/Proposal Money Order payable to ´The Public Treasury´ of US$25 is included for the application fee. A Certification of Registration will be issued afterwards.
Q. Is it possible for Non-Bahamians to purchase property in the Bahamas?
When it comes to foreigners purchasing property in the Bahamas the Government has very little restrictions. In fact, to support an investment-friendly climate and promote the economic growth and development of the Bahamas the Government has made available the International Persons Landholding Act. This Act makes it easier for Foreigners to buy property in the Bahamas. (For more on Foreign investments click here)
Q. What do you need in order to purchase property in the Bahamas ?
If the property is not a private residence, or not intended for development as such.
Q. What are the costs involved in buying property?
Other than your binder deposit, you will need to set aside funds to pay your closing costs, which are generally as follows:
- Government Stamp Duty The Government Stamp Duty (tax on the conveyance of real property). Stamp Duty in the amount of 2.5% must be paid upon delivery of the property. Stamp Duty is the responsibility of the Vendor, but is usually split between buyer and seller. Bahamians and Non-Bahamians now pay the same amount of Stamp Duty. First time buyers might qualify for a rebate on from stamp tax on a dwelling house or vacant land purchased for a dwelling house, up to the value of $250,000.00.
- Value Added Tax Value Added Tax in the amount of 12% must be paid upon delivery of the property. According to Act, VAT is the responsibility of the Purchaser, however in most cases it is split equally between buyer and seller. Purchases under $100,000.00 are not subject to VAT.
- Legal Fee You will need an attorney to check the property title in order to complete your purchase. The legal fee is usually 2.5% plus VAT, not inclusive of incidentals. Your attorney will also prepare your mortgage if you are using bank financing. This mortgage will need to be registered with Government and is subject to a a Stamp Tax of 1%.
- Bank fee Check with your loan officer on this one. Bank fees on the transaction amount start at 1%.
- Real Estate Agent´s Fee The real estate agents´ fees are set by The Bahamas Real Estate Association (BREA). The fees are determined as follows: Developed Property .............................. 6%
- Stamp Duty Tax
The Government Stamp Duty (tax on the conveyance of real property). Stamp Duty must be paid upon delivery of the property. Stamp Duty is usually split between buyer and seller. Bahamians and Non-Bahamians now pay the same amount of Stamp Duty. First time buyers might be excused from stamp tax on a dwelling house or vacant land purchased for a dwelling house, up to the value of $500,000.
- When the value is less than or equal to $20,000 .................................................... 4%
- When the value is more than $20,001 and is less than or equal to $50,000 ............ 6%
- When the value is more than $50.000.01 and is less than or equal to $100,000 ..... 8%
- When the value of the consideration is greater than $100,000.01 ......................... 10%
Subsequent to the implementation of VAT, the Stamp Duty rate changed to a flat 2.5% with a 7.5% VAT being charged in lieu of the former Stamp Duty rate on transactions above $100,000.
The VAT Rule notes that first time homeowners who are exempt from Stamp Duty will also be exempt from VAT.
Consider the following examples:
Property Value Tax Payable Pre-VatTax Payable Post-VAT
$ 80,000 8% Stamp Duty 2.5% (2.5% stamp duty + 0% VAT)
$150,000 10% Stamp Duty 10% (2.5% stamp duty + 7.5% VAT)
$500,000 (first home owner) 0% Stamp Duty 0% (0% stamp duty +0% VAT)
Q. What is involved in a Real Estate Transaction?
Real estate transactions usually begin with all parties concerned: the purchaser, the vendor, their respective attorneys, and the Realtor. The transaction includes an accepted purchase offer, with a subsequent deposit placed with the real estate professional as stakeholder. A conveyance is drafted by the seller’s attorney setting out the transfer of the land. An attorney will be hired by the buyer of property to determine the legitimacy of the title and check for encumbrances to the title. (A break in the chain of title owners or missing abstracts will reduce the marketability of subject property). It is the responsibility of the buyer’s attorney to stamp and record the conveyance and any other documents, such as a mortgage or debenture, which may be associated with the transaction. The vendor's attorney will then issue a copy of the conveyance, which is held in escrow pending the completion of the sale. Upon approval of the conveyance, the sale wraps up with the conveyance executed and the balance of the agreed purchase amount paid to the vendor.
The registration of the purchase must be applied to the Office of the Prime Minister. The application should be submitted together with a copy of the conveyance (proof of ownership), and evidence of payment of Stamp Duty and Real Property Tax. A Bankers Draft/Proposal Money Order payable to ´The Public Treasury´ of US$25 is included for the application fee. A Certification of Registration will be issued afterwards.
Q. Is it possible for Non-Bahamians to purchase property in the Bahamas?
When it comes to foreigners purchasing property in the Bahamas the Government has very little restrictions. In fact, to support an investment-friendly climate and promote the economic growth and development of the Bahamas the Government has made available the International Persons Landholding Act. This Act makes it easier for Foreigners to buy property in the Bahamas. (For more on Foreign investments click here)
Q. What do you need in order to purchase property in the Bahamas ?
- Purchase Permit
- As a non-Bahamian you will require a permit:
If the property is not a private residence, or not intended for development as such.
- You would need a registration certificate or permit along with title documents to be recorded in the Registrar General's office.
- Application for registration - $25.00
- Application for permit - $25.00
- Certificate of registration
