The recent budget tax changes affect the Bahamian real estate market in three ways, all of which could have a have a negative, and lasting impact on the luxury second home market. The three changes are:
- The increase in value-added tax (VAT) from 7.5 percent to 12 percent on legal fees and real estate commissions;
- Redefining owner-occupied to mean six months in residence; and,
- The elimination of a $50,000 cap on real property tax for non-owner occupied residences. Under the 2018-2019 budget, real property tax on non-owner occupied residences, meaning those lived in for six months or less, increases from one percent with a cap of $50,000 to two percent with no cap.
In an article published by the Tribune, Monica Knowles, Bahamas Realty’s top producer in 2016, explained how these changes could negatively impact on the industry should the government not approve the transition requests made by the Bahamas Real Estate Association (BREA).
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