REAL PROPERTY TAX

Real property taxes are assessed on all real estate in the Bahamas; unless the specific property is exempt by statute or otherwise. Whether exempt or not, all real property must be declared at the Department of Inland Revenue (“DIR”) (a division of the Ministry of Finance).

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

Property taxes are typically billed in mid-October for the ensuing tax year.

It is 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 property tax creates a first charge on real property. A First Legal mortgage will always be subordinate to unpaid real property tax. If real property tax is not current at the date a property transfer (i) the Bahamas Investment Authority (“BIA”) will not issue a Permit or Certificate of Registration to the non-Bahamian purchaser; (ii) the DIR will not VAT stamp the conveyance and/or Mortgage in question 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.

The most recent amendment to the Real Property Tax Act took effect on the 1st July, 2023. As at the date of writing:

• The term “residential property” is now 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

PROVIDED THAT where a person owns more than four dwellings that are not owner occupied, each property shall be classified as commercial property”

• The term “unimproved property” was re-defined as follows:
  1. Means property on which no improvements have been effected;
  2. Included property under construction;
  3. does not include any property that is used to carry on any business activity.
• The term “commercial property” was re-defined to be “any property used for business purposes and shall be deemed to include any property that falls within the proviso of the definition or residential property”
• Where property is owned by a company, the property may only be classified as “owner occupied” property 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.
• Where a –
  1. person owns more than one property as a residence for the owner; OR
  2. married person or his spouse own separate properties that are used as the matrimonial home or as a residence for either spouse.

Only one of those properties may be classified as Owner Occupied

• The annual tax shall be due and payable by the owner of the property by the 31 March in each year of the tax commencing on the 1 January, of that year. Notwithstanding the above, where payment is made by the 31 December of the tax year to which payment relates, no surcharge shall accrue on such amount. There is currently 10% discount available for those who pay full tax prior to the 31 March, 2023.  (*) NOTE THAT THERE IS  SOME CONFUSION WITH RESPECT TO THIS AMENDMENT AS RELATES TO PAYMENT DATES.
• 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 and all taxes current to such date.

RATES OF TAX EFFECTIVE JULY 1, 2023 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%
   • Balance over $500,000 – 2.0%
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%

• Not that with effect from January, 2023, condominiums, homes, villas and townhouses registered in a Government-approved hotel rental program are subject to the payment of a “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 iable 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.
• A tax exemption is provided (on application) for property owned by religious institutions, a non-profit organizations, trade unions, civic organizations and burial societies.

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.