Buyer’s guide to Abaco Real Estate
Investing In Abaco Real Estate
When buying in Abaco, the first tip is, to enroll the services of our fully licensed Abaco Real Estate company. One with a thorough knowledge of the real estate laws and the market rather than buying directly from a seller. With thirteen years experience in the local real estate scene, the brokers of Abaco Island Properties Bahamas are well qualified to advise any prospective buyer on Abaco Real Estate. We are conveniently located on Bay Street across from the Conch Inn.
The Bahamas is a developing nation with a stable economy. Dependent primarily on the tourism industry and maritime resources. Abaco boasts the most visitors’ return among the Bahamian islands. It has a population of second homeowners who spend a large part of the year on the island. Several high end resorts have sprouted in the last few years. They are, the Abaco Club at Winding Bay in the South. Baker’s Bay Golf and Ocean Club on Great Guana Cay and on a more affordable level, Schooner Bay, also in the South.
The government sees foreign purchasers with a friendly eye and although it might take a little longer than elsewhere at times, buying or reselling a property on Abaco is a standard procedure. Foreign ownership of property is encouraged. With a minimum investment of $500,000.00, one could apply for permanent residency. Otherwise a stay of nine months per year is allowed.
When Looking for a Property…
- Be as specific as possible when describing the property you are hoping to find.
- Be realistic about your budget and let the agent know about your financial status.
- Be prepared to make an offer quickly, should you find the perfect property. Like anywhere else, properties that show well and are well priced, sell fast.
- If financing is required, speak with your agent.
- Make a thorough inspection of the property you are interested in so as not to overlook anything.
- Ask questions. If your agent does not have an immediate answer, he or she will make every effort to find the information and supply you with one.
Buying a property in The Bahamas starts with a written offer or letter of intent. Once the offer has been accepted by the seller; a lawyer handles the rest of the transaction up to closing. There again, make sure you retain the services of a well established, reputable, Bahamian law firm.
Appointing Legal Representation
Once an agreement of terms to purchase has been met, it will be necessary to appoint an attorney to draw up a purchase contract. This is usually an attorney on the island and there are several Law firms to choose from. Your agent will assist you in choosing an one that best suits your transaction.
It is required that you use a Bahamian attorney familiar with the process in The Bahamas. Be sure to request a copy of the property recorded conveyance (Deed) that has The Registrar General’s Office stamp on it.
Below is additional information on purchasing property and property taxes in the Bahamas.
Abaco Real Estate
VAT and Stamp Duty
According to the VAT Rule, VAT is chargeable on all conveyances or real property valued at more than $100,000. In assessing the value of the property, the VAT Comptroller may consider the purchase price and the appraisal value of the property and the VAT Comptroller has the authority to choose the higher value. Real property valued at $100,000 and under is exempt from VAT.
For the avoidance of doubt please note the following:-
- Conveyances include the sale, lease, assignment or other transfer of real property from an owner/s to another.
- Real Property includes, but is not limited to:
- a) Vacant land
- b) dwellings for first time owner-occupiers whether or not valued over $100,000;
- c) Commercial buildings
- d) condominiums
- e) tenements or any other structures attached to the land;
- f) time-shares; and
- g) any buildings constructed for sale by contractors who are also the owners;
Prior to the implementation of VAT, Stamp Duty was charged on the value of the consideration (either the purchase price or the appraisal value) as per the following schedule:
Consider the following examples:
|Value of Consideration||Stamp Duty|
|$0 – $20,000||4%|
|Greater than $100,000||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 $100,000.
Consider the following examples:
|Property Value||Tax Payable Pre-Vat||Tax Payable Post-VAT|
|$ 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)|
Based on the examples considered, we can see that the total tax payable varies based on the value of the property; however once a transaction is over $100,000 there is no change to the tax due for conveyances of real property. There is however the additional VAT payable on the professional services rendered that relate to the transaction.
With regard to processing payments, VAT is paid first to the VAT Comptroller, who determines the basis on which the VAT should be paid. Once this is completed, the 2.5% Stamp Duty is paid to the Public Treasury.
The VAT Rule notes that first time homeowners who are exempt from Stamp Duty will also be exempt from VAT.
Who is responsible for the VAT?
The VAT Rule paragraph 31 states that the VAT tax invoice will be issued to the purchaser, which has led to some belief in the market that the purchaser is solely responsible for the VAT at 7.5% and that the vendor is solely responsible for the Stamp Duty (reducing the vendor’s tax burden).
However, the VAT Comptroller has clarified this issue by indicating that while the VAT Rule states that the purchaser will be invoiced for the VAT, the VAT Rule does not stipulate how a vendor and purchaser shall decide to share the payment.
Typically stamp duty was split (50/50) between the vendor and purchaser (unless otherwise agreed). This clarification means that the total tax split of stamp duty and VAT can still be maintained.
On a positive note, if a purchaser is a VAT registrant, that purchaser can claim the VAT payment as an input credit, provided that the property is exempt from the payment of VAT.
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.
noted: above VAT, Stamp Duty and Real Property Tax information is from the Bahamas Real Estate Association Website.
Updated: February 1, 2018
Seller’s Guide to Abaco Real Estate
Let’s Get Started Today! Abaco Real Estate is our Business.
To request information; simply complete our contact form.
We will provide you with information that you can use to evaluate your sales opportunities and real estate goals.
Once you have decided to move forward and sell your island property, prepare your property for sale. Understand your real estate goals, and with your real estate agent, establish a competitive price for your home.
Get your house in selling shape: clean the interior and exterior, increase curb appeal if needed and think about how you might stage the home for showings. Remember the first impressions are the lasting ones!
Your agent will establish a marketing plan for your property.
Some of our services include:
- Consistent Advertising
- Convenient Office Location
- Web Exposure on one of the best Real Estate Websites in the Bahamas
- Other customizable facets to get the word out about your property!
The process is about you; your plans and devising how we can best facilitate them. Selling your home in today’s market requires effective marketing strategies and the resources to implement them. Our agents will show your property to as many potential buyers as possible.
When you receive an offer (usually in the form of a Letter of Intent), read it over, consider what you require from the sale and either reject the offer, make a counter offer or accept the offer. If further negotiation is warranted, write down everything you have in mind and present it to your agent, who will advise you as to what is the best way to move forward and present your response.
Completing the Sale and Transfer of Title
Once the documents are executed and the balance of required funds are available for closing the transaction, the sale and transfer of title will be completed by your attorney. Your attorney will be responsible to handle the transaction on your behalf. He or she will make sure that the title is free and clear of encumbrances, liens or restrictions prior to completion. Your attorney will also apply for the appropriate permits required to finalize the purchase.
For Abaco Real Estate the buyers’ attorney will provide the funds for completing your sales transaction, in exchange for the transfer of title documents. The documents will be registered in The Registrars General Office in Nassau to ensure protection of your investment. Request a copy of your conveyance that has been stamped by the Registrar General’s Office.