Investors Guide to Bahamas

The Purchasing Process

Purchasing property in the Bahamas follows a similar process to buying property in other markets, such as areas in Europe. There are some restrictions that apply to foreigners, such as the restriction in ownership of land in excess of 5 acres.

All of the property purchased by foreigners in the Bahamas is required to be registered with the Investment Board and the Central Bank. These processes are carried out once the transaction is completed and the buyer’s solicitor can make the necessary arrangements.

Holding deposits are required for taking the property off the market while the buyer’s solicitor carries out the necessary legal due diligence checks. The holding deposit may be a set fee, or a percentage of the purchase price of up to 5%.

Using a lawyer specialising in property in the Bahamas is essential to receive correct advice and services. The legal firm will also be able to arrange the residency permits that are available to property buyers. The residency permits can also enable the immediate family of the buyer permission to reside in the Bahamas for the validity of the residency.

Once the legal checks on the property and development company have been carried out, the private purchase contract (PPC) will be signed by both parties. The PPC will stipulate the payment terms and obligations of both the buyer and the seller during the construction process. At the time of signing the PPC, an initial reservation deposit will be required, often between 10% and 30% of the purchase price.

The remainder of the purchasing costs will then be required upon completion, unless a payment structure has been outlined in the PPC.

Fees & Taxes

The ideal, relaxed lifestyle, coupled with a near absence of property taxes are drawing attractions of purchasing real estate in the Bahamas. The only taxes buyers are subject to is the property tax of 2% on real estate priced at over US$500,000.

The total purchasing costs in the Bahamas is between 1.6% and 8%, as the costs are calculated on a sliding scale based on the property purchase price. Stamp Duty is the main component of the fees also based on a sliding scale and split equally between the buyer and the seller.

• No income tax
• No capital gains taxes
• No inheritance tax
• Property taxes are up to 2% on properties priced over US$500,000
• Registration fees between US$100, an additional US$500 can be included for a homeowners residence permit.
• Stamp duty between 1% and 5%
• Legal fees between 0.5% and 2.5%

Financing the Property

The mortgage market in the Bahamas is well established, having almost doubled in the past decade. Traditionally property purchases in the country were made in cash by wealthy foreigners, yet the growth of the market expanded options with lower priced properties attracting a larger investor spectrum.

The local Central Bank offered financing at a static interest rate of around 9% for many years, dropping the rate in 2005 to 5.25%. Interest rates from international financial providers are often mid way between the Central Bank’s old and new rates.

While the terms and services of mortgages for purchasing property in the Bahamas will vary greatly between providers, the typical terms for financing include:

• Minimum loan amounts from US$100,000
• Maximum term of loan to 30 years
• Maturity of loan to the age of 70
• Maximum LTV at 70%, although some providers offer up to 95% with restrictions
• Variable and fixed rates available
• Mortgages in USD currency

More about overseas property finance

Visitors Guide to the Bahamas
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