If you own property in the Bahamas or are looking to purchase property in the Bahamas then you have probably thought about the taxes associated.
Photo above: A beautiful beachfront parcel for sale in Turtle Bay, Central Abaco Island.
Additional information is noted below, but here is a quick summary. Firstly it is best to deal with this in person in the Bahamas at the relevant office. Trying to attack the issue from afar will be frustrating to say the least. You can also hire a Bahamian law firm to tackle it for you. For those of us who prefer to be more hands on (or retired with lots of free time at hand), you will need to collect the following documents:
Full Appraisal Report
Copy of your conveyance (i.e. your title document)
Copy of last tax bill
A letter to tax office requesting a re-valuation
A simple form completed (Property Tax Application Assessment form)
You can contact me at dwayne@HGChristie.com to inquire on appraisal services in Abaco, or elsewhere in the Bahamas by contacting appraisals@HGChristie.com.
It is also important to note that any changes to property value are the responsibility of the property owner to report to the property tax office. If there any alterations, additions or improvements to your property which alter the property value the owner is required to report to the tax office. Obviously this seems a bit of an outdated approach, and many individuals choose to delay or omit changes. While this is acceptable in the short term, in the long term it can create some potential pitfalls.
I have had clients over the years who have built homes on a parcel of land and for various reasons neglected to report the change from undeveloped land to a residential home to the property tax office. This has inevitably led to problems when the property was eventually sold and a large tax bill was collected from the sale proceeds. That said, with the current rate structure, many real estate owners may find that their liability is reduced by shifting to owner occupied tax bracket.
One past client, had their tax value reassessed coincidentally the same year he built a home on the property. This led him to the assumption that the tax office had a record of his newly built home and had adjusted his tax liability on that basis. It turned out that they were entirely unaware of the improvements and they were billing him on undeveloped land for 15 years.
DO NOT ASSUME THAT TOWN PLANNING, MINISTRY OF WORKS OR BUILDING INSPECTORS COMMUNICATE AND UPDATE THE TAX OFFICE ON CHANGES TO YOUR PROPERTY. IT IS YOUR RESPONSIBILITY TO INFORM THE TAX OFFICE OF BUILDING OR IMPROVEMENTS. There is no central database and the different departments of government do not as a rule of thumb generally communicate or collaborate.
Bahamians and non-Bahamians owning real property in The Bahamas must pay property tax. Returns are due on or before December 31 each year, and are filed with the Chief Valuation Officer. Taxes are paid to the Public Treasury and can be paid at the property tax office or online at www.bahamasgov.bs. Rates are as follows:
- Owner-occupied residential property as of July 1, 2015.
- The first $250,000 of market value – Exempt
- On market value over $250,000 and up to $500,000* – 0.625%
- Over $500,000 – 1% (subject to a maximum of $50,000) %
- Vacant/Unimproved Land (non-Bahamians)
- First $7,000 of market value – $100
- Portion over $7,000 – 1.5%
- All other properties/commercial
- First $500,000 of market value – 0.75%
- Market value over $500,000 – 2%
- Residential Property (property not owner-occupied, comprising not more than four units (exclusive of outbuildings), used solely as a dwelling, beneficially owned by Bahamians and from which no commercial enterprise is conducted.
- Property valued under $75,000 – $300
- Property valued over $75,000 – 0.625%
So essentially, there are 3 categories – Owner Occupied, Undeveloped Land and ‘Other’.
Lately, a number of property owners in the Bahamas have had unreasonably high tax value assessments in recent years. What do you do now?
The Bahamas Government website has the following information:
Persons owning real property in the Bahamas are entitled to make application to the Real Property Tax office for reassessment once every 5 years. Property owners can have a law firm act on their behalf or undertake the application themselves. Requirements for reassessment include presenting a copy of the most recent tax bill, a current appraisal from a licensed reputable appraiser, completion of the Property Tax Application Assessment Form (available at the property tax office or online at http://www.bahamas.gov.bs), along with the submission of a signed letter from the owner of record (or their attorney) requesting the reassessment of annual real property tax liability. A 10% discount is applicable on accounts that are current and paid in full by March 31 in any year.
At the time of closing a sale transaction, the attorney for the new owner of the real property registers the sale with the property tax office. A current appraisal is often requested and presented along with the registration.
Your HGChristie Appraisal Team can provide services to address property tax assessment concerns.
- The Treasurer now has the power to sell unimproved/vacant land where real property taxes are in arrears and unpaid for at least 6 months after the expiration of 30 days from becoming due.
- New surcharge of 5% on all outstanding real property taxes owing after 31st December 2009.
Real Property Tax Assessment, Payment & Exemptions
The payment of Real Property Tax is required by law in The Bahamas. The bill is due and payable once produced and must be paid by December 31 to avoid an additional 5% interest. Please note that if a property is not up to date, it can be sold to recover the taxes owed.
Assessments are used by the Real Property Tax Valuations Unit to determine the value of a property and its related Property taxes. An assessment can be initiated by the property owner or by the Real Property Tax Unit.
All buildings registered on the National Register of Historical Buildings are eligible for exemption from real property tax. Exemptions are not automatic and must be applied for even when your property is listed on the Historical Buildings List.
Assessments are used by the Real Property Tax Valuations Unit to determine the value of a property and its related Property taxes. An assessment can be initiated by the property owner or by the Real Property Tax Unit. A Real Property may fall in the one of the following categories:
- Owner Occupied
- Vacant Land
- If a request is made by the owner of the property, the following forms must be completed and submitted to the Real Property Tax Valuation Unit:
- Property Tax Application Assessment form
- A Declaration of Real Property Tax form
- In regards to owner occupied properties, the owner is also required to complete a Affirmation form to facilitate tax exemptions on the section that they live in.
- A field visit is then conducted by the Unit where details about the property are gathered
- The office will use the information gathered to determine the value of the property and calculate the real property tax liability.
- The Unit will then write the owner to inform them of the tax liability, or the tax bill is prepared and issued.
- The owner is welcome to object and can visit the office to initiate this process.
- The bill is due and payable once produced. Penalties are incurred if bills are unpaid past December 31st of the current year.
- Property owners can pay property tax at the Real Property Tax office.
- Once payment is made, a receipt is issued by the office.
- National Insurance Board Number
- Property Owner’s name
- Valid ID, Passport
- Property Conveyance
- Current Appraisal (i.e. less than 12 months old)
Business Licence/Valuation Unit
P. O. Box N-13
Or contact the Abaco office of the Department of Inland Revenue at 1-242-699-0053