REAL PROPERTY TAX

Non-Bahamians are required to pay real property tax on all real estate interests in The Bahamas. There are some exemptions for Bahamian citizens.

No transfer of an interest in land in The Bahamas can be concluded unless the property has been assigned a Real Property Tax Assessment Number by the  Department of Inland Revenue (“DIR”) – even if the property has always been exempt from payment of real property tax.

Property taxes are typically billed in the 4th quarter of every  each for the ensuing tax year.

It is therefore incumbent on the owner of real property to ensure that the taxes are paid on or before they are due. Payments may be made to the DIR in either Bahamian or United States currency. Failure to pay taxes on time will result in a surcharge of 5% per annum at the end of each calendar year until payment.

Outstanding real property tax creates a first charge on real property. A  mortgage over the property will therefore be subordinate to any unpaid real property tax. A mortgage, albeit paid off in full, but for which a Satisfaction has not been stamped and recorded, will cause to the lender to be jointly and severally liable for the payment of any tax subsequently accruing from the date when the mortgage was fully paid off with taxes current to such date.

If real property tax is not current (i) the Bahamas Investment Authority (“BIA”) will not issue a Permit or Certificate of Registration to a  non-Bahamian purchaser; (ii) the DIR will not accept the Conveyance for VAT stamping and (ii) a Building Permit will not be issued by the Buildings Control officer until the tax is paid.

In the case of companies owning real property, the directors of the Company will be joint and severally liable with the Company for payment of any outstanding real property tax.

When a transfer of ownership is complete, the buyer must lodge a Declaration of Real Property with the DIR.  If, the buyer intends to owner occupy the property, a owner occupied affirmation form should accompany the Declaration. At this time of writing a property is deemed to be owner-occupied if the owner occupies and resides in the property exclusively on a permanent or seasonal basis.

Real Property Tax Rates in effect at this time are as follows:

1. Owner-Occupied
   • First $300,000 – Tax Free
   • Next $200,000 – @ 0.625%
   • Over $500,000 – @ 1.0%
   • Ceiling Owner-Occupied tax – $120,000
2. Commercial
   • First $500,000 – 0.75%
   • Between $500,000 and $1,500,000 – 1.0%
   • Balance over $1,500,000 – 1.5%
3. Unimproved Property owned by Non-Bahamians
   • First $7,000 – $100.00
   • Over $7,000 – 2.0%
4. Residential
   • Up to $75,000 – Flat fee of $300
   • Over $75,000 – -0.625%

Definitions:

• “Residential” means any property:
  1. that is not owner-occupied
  2. comprising not more than four units, exclusive of out-buildings;
  3. beneficially owned by –
     1. Bahamian citizen; or
     2. a person who is registered under the VAT Act for the operation of the property as a commercial rental establishment; and
     3. that is used solely as a dwelling place

• “Unimproved property” means:
  1. Means property on which no improvements have been effected;
  2. Includes property under construction;
  3. does not include any property that is used to carry on any business activity.
• “Commercial property” means “any property used for business purposes and shall be deemed to include case where a person owns more than four dwellings that are not owner occupied.
• “Owner-occupied” includes property owned by a company where the beneficial owner of more than 50% of the shares of such company:
  1. Occupies the property exclusively as a dwelling on a permanent ot seasonal basis; -and
  2. Submits a Declaration / Affirmation in the prescribed form stating as such.
  3. Provided that if a person owns more than one residence only one residence can be classified as Owner-occupied;
  4. Provided further that if married persons own separate residences, then only one of them can be classified as Owner-occupied.

Points of Interest:

• The DIR currently offers a 10% discount to persons who pay the full annual tax prior to the 31 March of the tax year.
• With effect from January, 2023, condominiums, homes, villas and townhouses registered in a Government-approved hotel rental program are subject to the payment of an annual  “Condo-Hotel Tax”.The Condo-Hotel Tax is currently Seventy-five (75%) percent of rate of tax applicable to “residential property” as shown above (currently 0.625% of market value) with a ceiling of One hundred and Fifty ($150,000) dollars. If the hotel rental program operator does not generate sufficient tax from the rental of a participating property to equal or exceed the Condo Hotel Tax the operator and property owner are jointly and severally liable to make up the difference.
• Bahamian pensioners are entitled to a fifty percent reduction on the balance of taxes due with respect to his or her dwelling home after the owner-occupied exemption has been deducted. The dwelling home must be owned and occupied by the pensioner. This amendment applies to Bahamian citizens who are eligible for National Insurance retirement benefits or are over the age of sixty-five (65) The reduction is only applicable up to $1,000,000 in value.
• In the case where a non-Bahamian sells an interest in land to a party who is exempt from payment of real property tax, the DIR will require that the tax assessed for the full tax year in which transaction closes is paid in full. Consequently, no adjusted refunds will be given to the non-Bahamian seller.

NOTICE: The information provided herein is not comprehensive and is not intended to be a substitute for legal advice and services. The Government may also change the rates from time to time.  The DIR also has the right to appraise and/or retroactively assess values of any property and tax that it deems to be undervalued.