Shrimp Hole Development

What you need to know – FAQ

 

thinker
* What are the Purchasing Costs?
* Why should Foreign Property Investors consider buying a home in The Bahamas? Isn’t it just an overpriced tax haven for the seriously rich?
* Can a foreigner buy property in The Bahamas?
* Are there any special permits required when purchasing property in The Bahamas?
* How do I go about getting a permit or registering my purchase with the Foreign Investments Board?
* In what form is title to property given?
* Do I need to engage the services of a local attorney when purchasing property?
* Is title insurance available in The Bahamas?
* What are the costs involved in buying or selling property?
* What information is required from Non-Bahamians when purchasing property in The Bahamas?
* After I purchase a property will I be able to repatriate the proceeds of sale whenever I sell it?
* Do I need any special approvals in order to build on a property or to make any changes to an existing structure?
* Are there good qualified architects, contractors and engineers available in the islands??
* May I use the services of a non-resident architect?
* Are Brokers and sales agents in The Bahamas licensed?
* What is the cost of construction?
* Is there local financing available to non-Bahamians and/or permanent residents?
* What taxes do you have in The Bahamas?
* How long can a visitor stay in the Bahamas without residency status?
* Is it possible to establish residency in the Bahamas and if so how does one go about it?
* What are the advantages to establishing permanent residency in The Bahamas?
* Is it possible to obtain Bahamian citizenship?
* Is it possible to live and work in The Bahamas?
* Is finance easily available for buying Bahamian properties?
* How can foreign nationals qualify for local mortgages and what are the restrictions?
* Do foreign property owners live alongside locals or is there a definite divide between locals and foreigners?
* What is the traditional architecture like?
* I’ve heard that the country’s status as a tax haven has been altered in recent years and that tax exiles are moving their money out and selling their properties. Is this true?
* Where are the up and coming areas in the Bahamas?

What are the Purchasing Costs?

All real estate commissions in the Bahamas are based on the total gross sales price of the property and are fixed by the Bahamas Real Estate Association (BREA). It is required by law that all advertised property prices are gross prices which includes sales commission, sellers stamp tax and legal fees. The buyer has to pay his half of the stamp tax and his legal fees on top of that. Do I pay Stamp Tax? A graduated tax is payable on the conveyance of all real property in the Bahamas based on the value as follows: When the value of the consideration is less than or equal to $20,000, the rate is 4% When the value of the consideration is greater than $20,000 and is less than or equal to $50,000, the rate is 6% When the value of the consideration is greater than $50,000 and is less than or equal to $100,000, the rate is 8% When the value of the consideration is greater than $100,000 the rate is 10% The usual practice in the Bahamas is for the tax to be shared equally between the buyer and the seller unless otherwise agreed upon. What are the Legal Fees? The fee charged by the lawyer who prepares the conveyance is normally 2 1/2% of the gross sales price. What are the registration fees for non-Bahamian purchasers? Application for registration – $25 Application for permit – $25 Certificate of Registration: (i) the value of the property is $50,000 or less – $50 (ii) the value of the property is over $50,000 but under $101,000 – $75 (iii) the value of the property is $101,000 and over – $100 Home owner resident card – $50 What are the Annual Real Property Tax ? The rates of tax on real property are as follows In respect of owner-occupied property: The first $250,000 of market value is tax exempt More than $250,000 and not exceeding $500,000 of market value is ¾% More than $500,000 and not exceeding $5,000,000 of market value is 1% More than $5,000,000 of market value is .25% In respect of unimproved property other than unimproved property exempt by virtue of Section 39 of the Real Property Tax Act: First $7,000 of market value is $100 More than $7,000 of market value 1½%. In respect of any other property: First $500,000 of market value is 1% More than $500,000 of market value is 2% Market value is defined as the amount the property would realize, if sold in the open market, without any encumbrances or restrictions. If the return is not filed, the owner is guilty of an offense, and upon conviction thereof, may be fined. Persons knowingly making false statements may be liable to fines, imprisonment, or both fines and imprisonment. If the tax is not paid on or before the last day the tax becomes due, a surcharge will be added. In the case of an extension of time, the Chief Valuation Officer may postpone the date on which the tax is payable in a particular case, by notice in writing. Are there any 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 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 have 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.

Back to top

Why should Foreign Property Investors consider buying a home in Bahamas? Isn’t it just an overpriced tax haven for the seriously rich?

The Bahamas has attracted a very wide range of property investors… from the very rich who have purchased large multi-million dollar estate properties to those who have purchased modest condominiums or homes in the $150,000 – $400,000 price range. The old axiom that states that location, location, location is a major determinant of demand and value has pushed the price of properties in specific areas of New Providence and Paradise Island to very high levels, but even at these levels prices are on par with other similar resort destinations. It is still possible to purchase waterfront and beachfront property in the Bahamas for as little as $50,000. Alternatively one can also spend $4,500,000 for 1 ½ acre beachfront site on Old Fort Bay (Nassau)…

Back to top

 

Can a foreigner buy property in the Bahamas?

Yes, foreign nationals are encouraged to acquire residential properties in The Bahamas. Underscoring the new attitude towards investors, the Government repealed the Immovable Property Act which required prior approval for the purchase, transfer or inheritance of real property by non-Bahamians. It has been replaced by the International Persons Landholding Act, 1993. The new act considerably eases the process of foreign ownership of homes and real estate. Prior Government approval is not required for non-Bahamians to purchase residential properties of less than two acres. Such acquisitions are, however, required to be registered with the Investments Board and the Central Bank. The new act has begun to fuel the revival of the second home market in The Bahamas and makes the assets of The Bahamas more accessible to those who enjoy living and/or doing business in paradise. The Government has also adopted an accommodating stance on the granting of residency permits to non-Bahamian investors and homeowners. Major international investors and owners of residences valued at $1.5 million or more are accorded accelerated consideration for annual or permanent residency permits. A homeowner’s card is available to all non-Bahamian owners of residences. The card facilitates immigration formalities at all Bahamian ports of entry and entitles the homeowner, his/her spouse and minor children to enter and remain in The Bahamas for the duration of the validity of the card.

Back to top

 

Are there any special permits required when purchasing property in The Bahamas?
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.

Back to top

 

 

How do I go about getting a permit or registering my purchase with the Foreign Investments Board?Non-Bahamians should also register their investment with the Exchange Control at the Central Bank of The Bahamas insure that on resale they will be able to remit the net proceeds of sale outside the Bahamas in the currency of the original investment.

Download PDF file “Investment Regulations“.

 

Back to top

 

In what form is title to property given?

The vast majority of property is sold freehold. There are a few exceptions of leasehold properties. These properties are generally Crown Lands (Government owned) properties that are leased for agricultural or development purposes. The Government of The Bahamas does not generally sell its property.

Back to top

 

Do I need to engage the services of a local attorney when purchasing property?

No, but the appointment of a local attorney is highly recommended. Apart from insuring that the documents of title are properly prepared and are in good order the local attorney, when representing the buyer, gives an Opinion on the title to the property. This Opinion is considered to be the same as title insurance as the lawyer is liable should the purchaser find that there is a defect in the title. Local lawyers carry indemnity insurance.

Listing of attorneys:

http://www.martindale.com/real-estate/c-bahamas/Nassau-lawyers-4.htm?c=N

Back to top

 

Is title insurance available in The Bahamas?

Yes. There are companies in the Bahamas offering title insurance. The risk premium generally runs between .20% – .27% of value.

Back to top

 

What are the costs involved in buying or selling property?

A typical sale, which is called a “Gross Sale”, assumes that the vendor will be responsible for the payment of:

  • The real estate agents commission (if an agent is involved). The commission on the sale of residential developed property is 6% of the gross sales price. The commission on the sale of undeveloped property is 10%.
  • The Government Stamp Duty (Tax on the conveyance of real property). This is a graduated Tax. The total amount of the Tax is calculated as follows:
    • When the value of the consideration is less than $20,000, the rate is 4%
    • When the value of the consideration is equal to or greater than $20,001 and is less than $50,000, the rate is 6%
    • When the value of the consideration is equal to or greater than $50,001 and is less than $100,000, the rate is 8%
    • When the value of the consideration is equal to or greater than $100,001 the rate is 10%

This tax is split between the vendor and the purchaser

  • The vendor’s legal fees. The legal fees on a sale or purchase are usually 2 1/2 % of the first $500,000, 2% of the next $500,000, 1% of the next $4,000,000 and 1/2% thereafter.

The Purchaser will be responsible for:

  • 1/2 of the Government Stamp Tax as set out above,
  • The purchaser’s legal fees as detailed above. This fee includes the lawyers Opinion on the title to the property.
  • Recording fees ($3.50 per page) on the conveyance and other closing documents which need to be recorded.
  • Payment of the permit under the International Persons Landholding Act if applicable.

In the event that the sale is a “Net Sale” the purchaser would be responsible for payment of all of the above-mentioned fees.

 

Back to top

 

What information is required from non Bahamians when purchasing property in The Bahamas?

We have provided a point by point breakdown in a PDF file of the steps necessary and information required by non Bahamians when purchasing property in The Bahamas.

Download PDF file: Non-Bahamian Info

 

Back to top

 

After I purchase a property will I be able to repatriate the proceeds of sale whenever I sell it?

Yes. You will be able to repatriate the entire proceeds including any profits provided you register the purchase with the Exchange Control Department of the Central Bank at the time of purchase.

Back to top

 

Do I need any special approvals in order to build on a property or to make any changes to an existing structure?

Yes. You will need to obtain approval from the Town Planning Board and a building permit issued by the Ministry of Works. A local architect or engineer would be able to assist you with this

Back to top

 

Are there good qualified architects, contractors and engineers available in the islands?

Yes. Most if not all architects in the Bahamas were schooled either in the United States, Canada or the United Kingdom and have international accreditations. There is a local licensing Board for architects. The construction industry is also regulated, but the qualifications for licensing are not nearly as rigorous. The leading contractors are all civil engineers with international accreditations or have certified engineers on staff. Many of the smaller contractors are products of a good apprentice system and are very adept and skilled at efficiently carrying out residential construction. Civil, mechanical and electrical engineers in the Bahamas, like the architects were schooled in other countries and hold international accreditations from those respective countries and must also have a license issued by their respective local Boards.

Back to top

 

May I use the services of a non-resident architect?

Yes, but that architect cannot work in the Bahamas without a permit to do so. All building plans submitted to the Town Planning Board and the Ministry of Works must be signed off by a local licensed architect and local engineers. As in any jurisdiction there are local customs and procedures required in getting the job done and it is recommended that you utilize the services of the local professionals.

Back to top

 

Are Brokers and sales agents in The Bahamas licensed?

Yes. Brokers and sales agents are licensed by The Bahamas Real Estate Association (BREA). Qualifications for licensing include sitting a written exam. BREA is an international member of The National Association of Realtors (NAR) and many BREA members are International Members of NAR and hold various accreditations offered by NAR including GRI, CRS, CRB, CIPS and CCIM. A few members are also members of the International Federation (FIABCI). The public is urged to ask and only use the services of a BREA member.

Back to top

 

What is the cost of construction?

Construction costs in The Bahamas, as you might imagine, vary widely depending on the location of the construction site, the design of the building, the materials used and the finishes. Costs may be as low as $85.00 per square foot for low cost housing, however, a modest or minimum structure consisting of concrete block construction, timber roof framing and asphalt roof shingles will cost between $100.00 to $150.00. An average home will cost from $150.00 to $200.00, but not with top of the line finishes such as marble tile and granite or Corian countertops. A better than average home with good finishes, will cost from $200.00 to $400.00. For a luxury home the cost would be more on the order of $500.00+ per square foot for the finest finishes and details. On average you can count on the cost being approximately 40% higher than a similar home in south Florida. This is mainly due to freight, duty and delivery cost to site representing approximately 65% of the F.O.B. material cost. It should also be pointed out that building standards are higher in the Bahamas than in South Florida. The majority of homes in the Bahamas are of concrete block or poured concrete construction and are built to meet a very strict building code.

Back to top

 

Is there local financing available to non-Bahamians and/or permanent residents?

Yes, but the loan facility may only be given in US$’s at international rates and the down payment required is generally on the order of 40% of value.

Back to top

 

What taxes do you have in The Bahamas?

First and foremost we have no income tax, capital gains taxes or inheritance taxes. There is no sales tax with the exception of the Stamp Duty paid on the conveyance of real property.

The Bahamas Government’s main source of revenue is from customs duties on all goods imported into The Bahamas. This tax may be as low as 7% as in the case of raw lumber, computer software and as high as 75% in the case of luxury automobiles, 160% on raw tobacco and 210% on cigarettes. There is an additional 7% stamp duty payable on these goods. The typical rate of duty is around 35%.

Real Property Tax

The taxable value of your property is based on the latest selling price. As regards undeveloped land, you are responsible for reporting the value of the improvements as you make them. If you possess an annual home-owners permit, you may deem your primary residence to be owner occupied.

On owner occupied properties:

  • First $250,000 – Exempt
  • Between $250,000 to $500,000 – 0.75%
  • More than $500,000 – 1%
  • Maximum payable annual tax is $50,000

On vacant land (owned by non-Bahamians):

  • First $7,000 of market value -$100
  • $7,000 – $100,000 of market value – 1.5%

The rates of tax on all other properties (commercial) is:

  • First $500,000 of market value – 1%
  • Excess over $500,000 of market value – 2%

 

Back to top

 

How long can a visitor stay in the Bahamas without residency status?

Visitors may reside in The Bahamas for a period of up to 8 months at a time, provided that they can indicate means of financial support for this period and have a return ticket to their homeland or some other country where they would be accepted. Visitors are not allowed to engage in any form of gainful occupation while in the Bahamas without a work permit.

Back to top

 

Is it possible to establish residency in the Bahamas and if so how does one go about it?

Yes. The Government of the Bahamas has set specific guidelines that allow non-Bahamians to establish permanent residency in The Bahamas. There are two categories of permanent residency: Permanent residency with the right to work and permanent residency with out the right to work. One of the criteria for permanent residency is the investment of a minimum of $500,000 in The Bahamas. This investment may take the form of the purchase of real property with a minimum value of $500,000. Non-Bahamians who own property in The Bahamas may apply to the Director of Immigration for an annual homeowner’s residence card. This card is renewable annually and entitles the owner, spouse and any minor child/children endorsed on the card to enter and remain in The Bahamas for the validity of the card. It is intended to facilitate entry into The Bahamas with minimal formalities. For complete details regarding permanent residency, homeowners permits and citizenship:

Download PDF file Residency Requirements.

 

Back to top

 

What are the advantages to establishing permanent residency in The Bahamas?

Apart from the opportunity to live and work in a warm and pleasant environment there are also significant tax advantages for citizens of countries with high personal and corporate income taxes as well as inheritance taxes. The advantages vary depending on the citizenship of the applicant and the tax laws of the applicant’s home country.

Back to top

 

Is it possible to obtain Bahamian citizenship?

Yes it is possible, but it is a long and involved process. Typically favour is given to long-term permanent residents and spouses of Bahamians.

Download PDF file Residency Requirements.

 

Back to top

 

Is it possible to live and work in The Bahamas?

Yes. But you must appreciate that The Bahamas has a small young population. The total population of the Bahamas is approximately 320,000 with a total land area of 10,000 square miles spread over 700 islands. The policy of the Bahamas Government is to protect the well being and provide maximum employment opportunities for Bahamians. In a nutshell in order to obtain a work permit to work in The Bahamas an employer must demonstrate that there is not a Bahamian ready willing and able to fill the position. Quite obviously the Bahamas would be overrun overnight if these safe guards were not in place.

Back to top

 

Is finance easily available for buying Bahamian properties?

Yes. For Bahamians and permanent residents most of the major banks and life insurance companies offer mortgages with some offering terms up to 25 years and as little as 10% down (a 10% down payment is only offered for lower priced properties up to approximately $100,000).

How can foreign nationals qualify for local mortgages and what are the restrictions?

Loan facilities for non Bahamians may only be given in US$’s at international rates and the down payment required is generally on the order of 40% of value.

Back to top

 

Do foreign property owners live alongside locals or is there a definite divide between locals and foreigners?

The only divide between locals and foreigners is an economic one. The Bahamas has a very strong middle class with a high percentage of professionals. Bahamians (black and white) have bought into all of the most exclusive areas of the Bahamas including Lyford Cay and Ocean Club Estates.

What is the traditional architecture like?

The traditional architecture is Colonial with an island/Bahamian flair. For residential properties this would typically include high pitched wood shingle roofs with dormer windows, wooden covered verandahs on the first and second levels, French doors, double hung windows with louvered shutters. For commercial properties colonial style columns at a grand entrance, high-pitched wood shingle roofs with dormer windows, covered verandahs on the first and second levels, French doors, double hung windows with louvered shutters. Modern variations of this style have eliminated the covered verandahs and double hung windows. Buildings are now designed for air-conditioning and a more efficient utilization of space. Unfortunately, some charm has been sacrificed in order to achieve this.

Back to top

 

I’ve heard that the country’s status as a tax haven has been altered in recent years and that tax exiles are moving their money out and selling their properties. Is this true?

Recent changes in our laws regarding financial reporting and compliance have affected some offshore banks and businesses that have been doing business in the Bahamas. Customers of these banks or businesses that were not willing to comply have taken their business elsewhere. However, there are now very few places that they can go to avoid taxes. Legitimate high net worth individuals and businesses that are minimizing taxes, legally, are still here. Many of the leading offshore banks have consolidated their services in keeping with new legislation. Our market is affected more by the US stock market and international economic conditions than by changes in our banking laws.

Back to top

 

Where are the up and coming areas in the Bahamas?

The most popular (and most expensive) areas in the Bahamas at the moment are the gated residential communities on New Providence and Paradise Island.

Popular residential communities in the family islands include: Harbour Island, Eleuthera; Hope Town, Abaco; Clarence Town, Long Island; and George Town, Exuma and The Exuma chain of islands.

Back to top

error: Content is protected !!