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Bahamas Real Estate Practices

Overview

The Bahamas has an attractive tax free status: no income tax, no capital gains tax and no inheritance tax.

Effective January 1, l994, The Bahamas introduced legislation known as The International Persons Landholding Act. In simplified terms, a non-Bahamian may acquire real property in The Bahamas without the need of a permit - provided the property is no more than five acres in size. The purchaser must, however, register the acquisition with the secretary to the Foreign Investments Board (FIB).

Real Estate Practices

The commission structure in The Bahamas is established and set by The Bahamas Real Estate Association (BREA). Rates are published and are specified as minimum rates. The rate on unimproved property (vacant land) is 10% and the rate on improved property is 6%. The vendor pays the commission in a typical sale, which is called a Gross Sale. In some cases a Net Sale is negotiated, in which case the purchaser pays all of the selling costs including the commission.

The conveyance of real estate in The Bahamas requires the payment of a Stamp Tax. The purchaser is required to pay his own legal fees and 50% of the Stamp Tax. The Bahamas does not have a Multiple Listing Service. In its place BREA members circulate their exclusive listings to other BREA members with whom they have established a co-brokerage arrangement. The commission splits are the same as if it were an MLS.

Mortgages are available for foreign buyers. The buyer is required to borrow in U.S. dollars, rather than local currency. Rates are typically 2 - 2 ½ points above LIBOR and down payment requirements range from 30 - 50%.

There are various factors that can delay closing or settlement. One of these is whether or not the purchaser is required to apply to The Financial Investment Board (FIB) for approval to purchase as mentioned previously.

Information courtesy of Bahamas Realty Limited