Attractive investment opportunities in The Bahamas are plentiful. With the fantastic beauty of these islands, a luxurious lifestyle, tax benefits and investor incentives, The Bahamas is an investor’s paradise.

Whatever type of investment you are interested in… perhaps a pristine beachfront lot in the Family Islands, a high demand rental property, a spectacular second home, or even a site to build a multi-million dollar resort… this Investor Guide will start you in the right direction and the professionals at Paradise Sales and Rentals will be happy to assist you further.

The fees and costs associated with Bahamian real estate transactions and ownership are detailed below, along with other information and resources relevant to investing in The Bahamas.

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Allocation of Costs 

Most real estate sales in The Bahamas are contracted on a gross basis and all advertised prices are required by The Bahamas Real Estate Association (BREA) to be gross figures.

The seller will pay:

• The real estate agent’s commission (if an agent is involved)—see Real Estate Commissions below.
• Their own legal fees—typically 2½% of the gross contract price.
• ½ of the Government Stamp Tax—see Government Stamp Tax on Property Conveyances below.

The purchaser will pay:

• 10% of the contract price upon signing of the sales agreement, with the remainder due at closing.
• Their own legal fees—typically 2½% of the gross contract price.
• ½ of the Government Stamp Tax—see Government Stamp Tax on Property Conveyances below.
• 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—see Associated Fees below.

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Government Stamp Tax on Property Conveyances 

A graduated tax is payable on the conveyance of all real property in The Bahamas as follows:

• Up to and including $20,000 - 2%
• From $20,000.01 to $50,000 - 4%
• From $50,000.01 to $100,000 - 6%
• From $100,000.01 to $250,000 - 8%
• Over $250,000 - 10%

This tax is generally shared equally (50/50) by the buyer and the seller and is the only sales tax in The Bahamas.

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Stamp Tax Exemption 

To ease the financial burden for first time homeowners, an exemption to the Government Stamp Tax was enacted by the Bahamian government in 2003.

As of the 1st day of January 2003 and shall expire on the 1st day of January 2008:

Every application by a person for the exemption of stamp duty on instruments relating to the acquisition and mortgage of real property valued at two hundred and fifty thousand dollars or less, to be used exclusively by the owner of such real property as a first time dwelling house shall be made in writing to the Minister of Finance and such application shall be accompanied by an affidavit by such person stating that he intends to occupy and reside in such house and there is no other house being held on his behalf for which an exemption has already been granted.

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Lawyer Fees  

A Bahamian lawyer is required for all real estate transactions in The Bahamas. The buyer and the seller are responsible for their own legal fees on the sale of property. The standard bar scale of fees with respect to a conveyance is 2 ½% of the contract price.

The fees include the lawyer’s 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.

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Real Estate Commissions 

The property owner is generally responsible for paying the real estate commission.

Vacant or unimproved land: 10% of the sales price.
Improved property: 6% of the sales price (8% in the Family Islands).
Commercial property, building or business: 10% of the sales price.

If a tenant that was procured by a real estate agent subsequently purchases the property, the agent involved is due a full sales commission on the contract price, as detailed above.

One year lease: 1 month rent.
Two year lease: 1½ months rent.
Three year lease: 2 months rent.
Less than one year lease: 10% of gross rent.

If a tenant that was procured by a real estate agent renews a lease, that agent is due a full rental commission as detailed above, even if the terms of the lease are re-negotiated.

Individual rental unit: 10% of the rental income, paid monthly.

Management of a rental unit includes receipt and deposit of rental income, payment of bills and utilities for the property where funds are provided by the landlord and coordination of maintenance and repairs. Monthly statements may be prepared for the landlord.

Other forms of management contracts will be negotiated on a case-by-case basis.

Paradise Sales and Rentals is a full service real estate company handling the management of condominium developments and individually owned units.

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Annual Property Tax 

As a property owner in The Bahamas, one will pay an annual real property tax - one of the few taxes levied in The Bahamas.

Effective from January 1, 2003, the rates of tax are as follows:

For owner occupied properties:

• The first $250,000 is tax exempt.
• On that portion in excess of $250,000 and less than $500,000 the rate of tax is ¾% of the government assessed value of the property.
• On that portion in excess of $500,000 the rate of tax is 1% of the government assessed value of the property.
• The maximum annual tax will not exceed thirty five thousand dollars.

For vacant or unimproved land (owned by non-Bahamians):

• The first $3,000 of the government assessed value - $30.
• $3,000 - $100,000 of the government assessed value - 1%.
• Above $100,000 of the government assessed value - 1½%.

For all other properties (commercial):

• First $500,000 of the government assessed value - 1%.
• The excess over $500,000 of the government assessed value - 2%.

Exemptions:

• Property owned by Bahamians and situated in the Family Islands.
• Property approved as commercial farm land (by the Ministers of Agriculture, Trade and Industry and Finance).
• Unimproved property owned by Bahamians, meaning property without physical additions or alterations, or any works benefiting 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

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Non-Bahamian Purchasers 

The International Persons Landholding Act, 1993, provides for the sale of real property in The Bahamas to non-Bahamians.

Permits are required by non-Bahamians, as provided under the International Persons Landholding Act, if:

• The property being purchased is greater than 5 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 property for which a permit is not required must still register their purchase with the Foreign Investment Board after-the-fact.

Non-Bahamians are not required to obtain permits for leases or register leases unless they are for trade or business purposes or the terms exceed 21 years.

Certificate of registration or permit must be recorded at the Registrar General’s Department along with title documents. For more details and application forms visit www.investbahamas.org.

Non-Bahamians should also register their investment with the Exchange Control Department of the Central Bank of The Bahamas to ensure that upon resale they will be able to repatriate the net proceeds of the sale in the currency of the original investment, e.g. U.S. Dollars. www.centralbankbahamas.com

Associated Fees: Application for registration - $25.00
Application for permit - $25.00
Certificate of registration:

the value of the property is $50,000 or less - $50.00
• the value of the property is over $50,000 but under $101,000 - $75.00
• the value of the property is $101,000 or above - $100.00

Home owner resident card - $500.00 annually
* Value in relation to a lease is the annual rent multiplied by the number of years

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Real Estate Brokers and Agents 

Bahamian real estate brokers and sales agents are licensed by The Bahamas Real Estate Association (BREA). Only BREA licensed Realtors may legally sell real estate in The Bahamas. BREA is an international member of The National Association of Realtors (NAR) and many BREA members hold international accreditations offered by NAR. www.bahamasrealestateassociation.com

Andrea Brownrigg, broker and President of Paradise Sales and Rentals, has served as a director of BREA for three terms, serving for 6 years and also served as Treasurer. She was the 4th Bahamian Realtor to earn the acclaimed CRS (Certified Residential Specialist) Designation, placing her in the top 4% of Realtors in the world. Mrs. Brownrigg has specialized in Paradise Island real estate for over 20 years, making her your best resource in this area.

The CRS is the highest Designation awarded to sales associates in the residential sales field and recognizes professional accomplishments in both experience and education.

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Title and Title Insurance 

In The Bahamas most property is sold Freehold with a few exceptions being leasehold properties. The leasehold properties are generally Crown Lands (Government owned) properties that are leased for agricultural or development purposes. The Bahamian Government does not generally sell its property.

It is required that a local attorney be involved in Bahamian real estate transactions. The attorney will ensure that the documents of title are properly prepared and in order and most importantly, will give 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.

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

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Companies Purchasing Bahamian Real Estate 

It is possible to purchase Bahamian real estate in the name of a company. Companies incorporated outside of The Bahamas will have to be registered as a Foreign Company under the Companies Act 1992 (approximate cost $1,500).

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Financing 

If financing is required, it is highly recommended that you pre-qualify for a loan before viewing potential properties. This will enable you to consider properties in the correct price range, saving you time and frustration… and you might find out that you can afford more than you imagined! Pre-qualifying also helps you to negotiate with confidence.

For qualified borrowers, financing of up to 95% is available to Bahamians from a multitude of banks, insurance companies and other institutions.

Local financing is available for non-Bahamians in US$ at international rates. The down payment required is generally on the order of 35-40% of the appraised value of the property or contract price, whichever is lower. Consideration may be given for alternate terms on a case-by-case basis.

Several local institutions currently offer US Dollar mortgage financing at internationally competitive interest rates:

Ansbacher (Bahamas) Limited
(242)322-1161
www.ansbacher.com/bahamas

Bank of The Bahamas
(242)322-1210
www.bankbahamasonline.com

Butterfield Bank
(242)393-8622
www.butterfieldbank.bs

Paradise Sales and Rentals has established relationships with loan officers and can assist in expediting the process of acquiring financing.

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International Investors 

Overseas investors may acquire residential properties in The Bahamas of up to five acres without prior government approval. Such acquisitions are required to be registered in accordance with the International Persons Landholding Act.

The National Economic Council (NEC) is headed by the Prime Minister and responsible for management of the National Investment Policy. This policy is designed to support an investment friendly environment for both Bahamian and international investors. The operational activities of NEC are carried out by The Bahamas Investment Authority (BIA), a unit of the Office of the Prime Minister. www.opm.gov.bs

International investors seeking to do business in The Bahamas should submit project proposals to the BIA. Capital investments must be at a minimum of $250,000. There are specific areas targeted for international investment and/or joint ventures with Bahamian participation, while a number of areas are reserved for Bahamians.

Investors should be guided by the National Investment Policy, copies of which are available at The Bahamas Investment Authority: www.investbahamas.org.

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Investment Incentives 

• The Free Trade Zone Act
• The Investment Incentive Act
• The Spirits and Beer Manufacturers Act
• The Hawksbill Creek Agreement Act
• The Industries Encouragement Act
• The Hotels Encouragement Act
• The Tariff Act
• The Export Manufacturing Act

These acts provide varying degrees of relief from the payment of customs duties on building materials, equipment and approved raw materials, relief from licensing fees and relief from real property taxes of periods up to 20 years. The Free Trade Zone Act and the Hotels Encouragement Act may provide relief from Stamp duties.

Copies of incentive legislation are available at www.opm.gov.bs and at www.investbahamas.org or for purchase at Government Publications, located on Rawson Square, downtown Nassau.

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Taxes 

There is NO income tax, capital gains tax or inheritance tax in The Bahamas. There is no sales tax other than the Stamp Tax paid on the conveyance of real property.

The primary source of revenue for the Bahamian Government is the customs duty charged on all imported goods. This tax may be as low as 7% for building materials, as high as 75% in the case of some luxury items and 210% on cigarettes. The average rate of duty is approximately 35%.

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Home Owner Resident Card 

A non-Bahamian who owns and maintains a home in The Bahamas may obtain an annual Home Owner Resident Card upon application to the Director of Immigration and payment of $500.00. The card expedites the immigration process 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 unless their entry is otherwise barred under the Immigration laws.

The card is renewable annually and does not allow persons to engage in any form of gainful employment without a work permit.

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Annual or Permanent Residency 

Residency in The Bahamas can have significant tax advantages for citizens of countries with high personal and corporate income taxes as well as inheritance taxes.

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 without the right to work.

Accelerated consideration of applications for annual or permanent residency will be given to major international investors and owners of properties valued in excess of $500,000.

Non-Bahamians who own property in The Bahamas may apply to the Director of Immigration for an annual Home Owner Resident Card.

Without Annual or Permanent Residency, a non-Bahamian may stay continuously in The Bahamas for up to 8 months, provided they can show means of financial support and possess a return ticket to a country where they will be allowed entry. They will not be allowed to engage in any form of gainful employment in The Bahamas without a work permit.

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Work Permits 

The policy of the Bahamian government is to grant work permits for expatriates if the position cannot be filled by a suitably qualified Bahamian. If setting up a business in The Bahamas, necessary work permits for key personnel will likely be granted as stated in the National Investment Policy.

Businesses requiring work permits for persons other than key personnel are encouraged to discuss these requests with The Bahamas Investment Authority in advance. Employers must advertise these positions locally and consult The Bahamas Employment Exchange before they can obtain a work permit for the position.

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Bahamian Citizenship 

It is possible to obtain Bahamian citizenship, but it can be a long and involved process. Typically priority is given to long-term permanent residents and spouses of Bahamians.

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Important Resources 

This material is based upon information that we consider to be reliable, but we cannot guarantee that it is accurate and complete, and it should not be relied upon as such. When buying or selling property in The Bahamas, one should first consult with the relevant local authorities or request an attorney to do so on your behalf.

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