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Buying a House
on Harbour Island
What's the first thing I need to know about buying here?
Can anyone own land in the Bahamas?
Will I need a lawyer?
In what form is title to property given?
Do I need title insurance?
What's the best way to furnish my new home on Harbour Island?
How are customs fees calculated?
What other expenses will I face?
Is there an annual property tax?
Is this an investment?
Who pays for what?
What are the benefits of applying for residency?
Comparative Glossary of real estate terms Bahamian - American
What's the first thing I need to know about buying
here?
You can do it. Your realtor is a professional who knows the market and will
walk you through the steps. Whether it's your first home for raising your
family or a vacation getaway, your realtor can make the process almost effortless
for you. ]
Can anyone own land in the Bahamas?
Yes. Bahamian nationals, of course, may own land; and furthermore, the International
Persons Landholding Act, 1993, provides for the sale of real property to
non-Bahamians.
Will I need a lawyer?
Yes. A local attorney will facilitate searching the title, ensuring
that the documents of title are properly prepared and are in good order,
and giving an Opinion on the title to the property. This Opinion is considered
to be the same as title insurance as the lawyer is liable should the purchaser
find a defect in the title. Local lawyers carry indemnity insurance.
In what form is title to property given?
The vast majority of property is sold Freehold. The exceptions are for Leasehold
properties, which are generally Crown Lands, i.e., Government-owned properties
that are leased for agricultural or development purposes. Generally, the
Government of The Bahamas does not sell its property.
Do I need title insurance?
It couldn't hurt. Risk premiums run about .2% of value.
What's the best way to furnish my new home on Harbour
Island?
Very little is available here. It's a small island. Getting things delivered
here is usually not a problem; it's just expensive. Thus, as TJ Davis, who
recently built says, "You'll have to become a smart shopper and decide between
two basic choices":
1. Shop in Nassau. Get there by plane or fast ferry. Expenses will include
travel, lodging, food, and shipping.
2. Fly to the States. More expensive in some ways but the upside is more
variety and sometimes significantly lower prices. In Ft. Lauderdale or
Miami ship your goods to G&G, who will get them to Harbour Island.
Once again, figure the costs of travel, room & board, etc. Then there
are customs fees.
How are customs fees calculated?
They range from as little as 8% for a computer to 42% for a car. And the
fees are based on the gross amount listed including shipping.
Example: You buy a table in Miami for $1000 and pay G&G $150 to ship
it to Harbour Island. Total cost to you so far is $1150. Customs
figures its fee on that amount; thus, 42% of $1150 = $483. Of course,
now you have to get it home from the dock, which usually involves hiring
a local trucker.
A good rule of thumb in keeping track of your budget when you shop in
the States is to mentally add 50%; thus if its price tag is $100, it will
ultimately cost you about $150 to enjoy it in your new Harbour Island
home.
What other expenses will I face?
It's very much like buying a house in the United States with closing costs
and lawyer's expenses and title search fees and permits and inspections.
The Government Stamp Duty
The largest extra cost is for conveyance. This is a graduated tax on
the conveyance of real property that is sometimes split between the vendor
and the purchaser. Currently, the Duty is calculated as follows:
Under $20,000 2%
$20,000 $50,000 4%
$50,000 $100,000 6%
$100,000 $250,000 8%
Over $250,000 10%
Is there an annual property tax?.
Yes. Properties are assessed a value. For owner-occupied properties, the
tax is nothing on the first $100,000, 1% on the next $400,000, and 1½
% on the excess over $500,000. On other properties, the rate is 1% on the
first $100,000, 1½ % on the next $400,000, and 2 % on the excess
over $500,000.
Is this an investment?
Whether buying or building, Harbour Island affords the smart investor high
quality real estate opportunities. Further, with legitimate tax and estate
planning, real estate may pass on to the next generation free of income,
capital gains, and estate tax.
Non-Bahamians should also register their investment with the Exchange
Control at the Central Bank of The Bahamas to ensure that on resale they
will be able to remit the net proceeds of sale outside the Bahamas in
the currency of the original investment.
Who pays for what?
A typical sale, called a Gross Sale, assumes the following:
The Vendor (seller) pays
1. A portion of the Government Stamp Tax
2. The real estate agents commission. The commission on the sale
of residential developed property is 8% of the gross sales price; on the
sale of undeveloped property, it's 10%.
3. The vendor's legal fees. The legal fees on a sale or purchase are
usually one-half of 2½ % of the first $500,000, 2% of the next
$500,000, 1% of the next $4,000,000 and ½% thereafter.
The Purchaser pays
1. A portion of the Government Stamp Tax
2. One-half of the purchaser's legal fees as detailed, to include the
lawyers Opinion on the title to the property.
3. Recording fees ($3.50 per page) on the conveyance and other closing
documents which need to be recorded.
4. Permit fees under the International Persons Landholding Act if applicable.
What are the benefits of applying for residency?
The Bahamas has no income tax, capital gains taxes, or inheritance taxes.
Also, there is no sales tax with the exception of the Stamp Duty paid on
the conveyance of real property.Thus, you may want to consider applying
for Permanent Residency, which is available to those who invest a minimum
of $500,000 in the Bahamas. This investment may take the form of the purchase
of real property with a minimum value of $500,000.
Comparative Glossary of
Selected Real Estate terms
| American |
Bahamian |
| closing |
completion |
| seller |
vendor |
| earnest money deposit
|
deposit |
| escrow agent |
stakeholder |
| warranties of title
|
conveyance as beneficial owner |
| title report |
abstract or epitome of title |
| title objections |
requisitions on title |
to produce sufficient title
(as required by law) |
to deduce proper title |
|
all of seller’s right, title, and interest (typically defined as
“the Property,” etc.)
|
hereditaments |
See also: Building Here
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