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Buying a Bahamas investment property presents a unique opportunity. With its proximity to the U.S., excellent healthcare, and the many local attractions to enjoy, you’ll wonder why you waited so long.
There is much to consider when looking into buying or investing in a property in the Bahamas, and we’re here to help through every party of the buying process. Living in the Bahamas for a time before purchasing your investment property will give you an idea of the areas you’d prefer to settle and buy your home. Living on the islands will also allow you to experience the local culture, cost of living, and school opportunities for the children.
Of course, if you have a real estate agent you trust, they can get all of this information for you and help you find a home that’s the best fit.
Contact us at MCR Bahamas if you’re ready to start your search right now, or read on!
Laws & Permits
Unlike most destinations in the Caribbean, the Bahamian government does not require licenses and permits to purchase a property. However, there are exceptions, such as the purchase of larger properties, or if a property is purchased specifically to rent it out or develop it commercially, which may be the case if you’re looking for an investment property.
International Persons Landholding Act
The Bahamas enjoys an active second home market facilitated by official policy that welcomes foreign nationals who wish to buy property of five acres or less for personal residential use–in which case Government approval is not required. However, the acquisition must be registered in accordance with the International Persons Landholding Act.
The International Persons Landholding Act outlines how non-Citizens can purchase and own property in the Bahamas. The act requires all foreigners who plan to lease their properties out to register with the Bahamas Investment Authority.
The fees include:
- Application fee: $25.00
- Application for permit: $25.00
- Permit: $500
- Certificate of Registration:
- For $50K or less: $50.00
- Between $50K & $101K: $75.00
- More than $101K: $100.00
Foreign-Owned Homes in the Bahamas
If you have a foreign-owned rental home, then you’ll need to apply for an additional license to operate as a rental property. Your annual taxes to run a property in this manner include:
- A property with a market value less than $250K: exempt
- Between $250K and $500K: 0.75%
- Over $500K: 1%
- A 10% hotel guest tax will need to be collected for each room available for rent.
What would it take to obtain residency in The Bahamas?
Second-home owners are eligible for a Home Owners Residence Card, renewable annually. This card facilitates entry into The Bahamas and entitles the owner, their spouse and minor children to enter and remain in The Bahamas for the duration of the validity of the card.
Accelerated consideration of applications for annual or permanent residence in The Bahamas will be given to major international investors and fit and proper owners of residences valued at $500,000 or more.
If you’re purchasing a home to rent out in the Bahamas, you’ll want to understand the tenancy laws. Rentals in the Bahamas fall into two categories: short term rentals and common rentals.
Short term rentals provide holiday makers and tourists with accommodation over a short period of time. Generally, a reservation fee of 20-50% is levied against tenants on top of the per night price.
Common rentals are more permanent accommodations that generally require a security deposit as well as the up-front payment of the first and last months’ rent.
Rental amounts, for either type of rental, can be freely negotiated between landlords and tenants, since there are no government restrictions placing limits on rental values.
Taxes for Bahamas Investment Properties
The beauty of the Bahamas is that there is no income tax, capital gains taxes, or inheritance taxes. On top of this, there is no sales tax. However, there is a Stamp Duty and Value Added Tax imposed on the conveyance of property.
Because of the lack of taxes, the government earns revenue through customs duties that are imposed on goods imported into the Bahamas. The average rate of duty is approximately 35 percent.
Stamp duty is a tax on the conveyance of property. It is a graduated tax and the total amount of tax that is imposed is as follows:
- When the value of the consideration is less than $100,000 the rate is 2.5%.
- When the value of the consideration is $100,000 or more the rate is 10%.
In the Bahamas, it is also customary for the buyer and seller to share the tax equally, unless otherwise decided. And anyone who is buying a property for the first time may be exempt from the Stamp Duty tax on a residential property, or vacant land, bought for residential purposes up to $500,000 in value.
Value Added Tax
As of January 1, 2022 the Bahamas Government Value Added Tax (VAT), is 10% on all products and services in The Bahamas. It was first implemented by the Bahamian government in 2015, and it is a consumption tax that is payable on all property conveyances, commissions and legal fees.
Real Property Tax
The payment of Real Property Tax is required by law in the Bahamas. The bill must be paid in accordance with the Real Property Tax Act so you can avoid interest. Assessments are carried out by the Department of Inland Revenue to determine the value of a property and its related property taxes.
In respect to owner-occupied property here are the rate of taxes:
- For the first $250,000 of market value the property is tax-exempt.
- For more than $250,000 and less than $500,000 of market value is taxed 0.625%.
- For more than $500,000 and less than $5,000,000 of market value is 1%.
- For more than $5,000,000 of market value it is 0.5% (capped at $50,000 annually)
In respect to unimproved property here are the rate of taxes:
- For the first $7,000 of market value is $100.
- For more than $7,000 of market value 2%.
In respect to any other property here are the rate of taxes:
- For the first $500,000 of market value is 1%.
- For more than $500,000 of market value is 2%.
Other Bahama Real Estate Costs
Usually, there are no special permits required but non-Bahamians may need to register their property acquisition to the Foreign Investment Board.
Permits can be required from non-Bahamians under the following circumstances:
- The property for purchase is larger than two acres.
- A portion of the property may be rented out.
- The buyer has plans to develop the property for business purposes.
Property Types in the Bahamas
Freehold or Leasehold properties
The vast majority of properties are sold as freehold properties. However, there are a few exceptions to leasehold properties. These properties are generally Crown Lands, which means they are Government-owned properties that are leased for agricultural or development purposes.
Short-term & Long-term rentals
Short-term rentals are fairly popular for holidays or vacations, with many owners listing their properties on Airbnb. And long-term rentals are becoming more popular as more and more people move to the Bahamas. Plus, it helps that rentals are freely negotiated between landlord and tenant.
Location: Where to buy a Bahamas Rental Property
Typically people move to the most popular places. In the Bahamas, the main island of New Providence, especially the capital city of Nassau is highly popular. The most popular neighborhoods are Lyford Cay and Old Fort Bay.
The luxury communities on Paradise Island are also starting to soar in popularity, and the luxury residences found in the Reef & One Ocean are particularly popular.
MCR Bahamas is happy to help you find the right property for you through our 3D tours, in-person visits, and agents that go the extra mile. Whether you’re searching in Ocean Club Estates, Paradise Island, The Pointe, Lyford Cay, Albany, Old Fort Bay, Sandyport, The Abacos, Bimini, Eleuthera, The Exumas, and more…we have the home for you.
Conclusion: Is buying in The Bahamas a good investment?
Buying, selling and leasing real estate has historically been a tried and true method for growing wealth, and purchasing a Bahamas investment property is no different.
With its fair share of positives like the lack of taxes, amazing weather, a vibrant culture, relaxed lifestyle, and luxury waterfront properties–there are almost endless reasons to move to the Bahamas. More importantly, the current market is in the buyer’s favor, so don’t wait too long to buy the investment property of your dreams.
So if you’re looking for a luxury home in The Bahamas, contact us at MCR Bahamas today!
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