THE BAHAMAS ISLAND Taxes

1. Taxes, Fees & Costs of Ownership

The Bahamas offers one of the most favourable tax environments of any property jurisdiction globally. There is no income tax, capital gains tax, inheritance tax or wealth tax — which means the primary transactional cost is stamp duty on acquisition, and annual costs are limited to modest property tax (for most residential properties) plus insurance, maintenance, and any applicable VAT.

A. Acquisition Costs

Stamp Duty

Stamp duty is the primary government charge on Bahamian property transactions and is typically split between buyer and seller. The published stamp duty schedule as of the time of writing applies tiered rates based on purchase price:

  • ⦁ Properties valued at US$100,000 or less: 2.5% on the full value (paid by buyer)
  • ⦁ Properties valued above US$100,000: 5% on the portion above US$100,000 (split equally between buyer and seller — each pays 2.5%)

In practice, for most significant international property transactions (above US$100,000), the effective total stamp duty is 5%, shared equally between buyer and seller — each paying 2.5% of the purchase price. Your attorney must confirm the current applicable rates and split arrangement for your specific transaction, as rates are subject to legislative change.

Value Added Tax (VAT)

The Bahamas introduced VAT in 2015, currently levied at 10%. VAT applies to certain property transactions, including commercial property and some residential transactions depending on the status of the seller (whether VAT-registered). For most resale residential transactions between private individuals, VAT is not typically applicable on the property itself — but legal fees, agency fees, and other professional services are subject to VAT. Your attorney should confirm the VAT treatment of your specific transaction.

Legal Fees

Conveyancing legal fees in the Bahamas are typically charged as a percentage of the purchase price, with the Bahamas Bar Association publishing a scale of recommended fees. As a general guide, expect legal fees in the range of 1.5–2.5% of the purchase price, though this varies by transaction complexity and attorney. VAT at 10% applies to legal fees.

Real Estate Agent Commission

In the Bahamas, real estate agent commission is typically paid by the seller, not the buyer. Buyer's agents do exist and may be separately engaged; if you are using a buyer's agent, clarify the commission structure at the outset. Typical total commission on a sale is in the range of 6%, paid by the seller from their proceeds.

Survey and Valuation

A professional survey is strongly recommended, particularly for Out Island properties, land purchases, or any property where boundary clarity, encroachment, or structural condition is relevant. Survey costs vary by property size and complexity but should be budgeted as a standard part of acquisition costs.

Total Acquisition Cost Estimate

For planning purposes, buyers typically budget an additional 6–10% of the purchase price to cover all acquisition costs: buyer's share of stamp duty, legal fees (including VAT), survey/valuation, registration, and incidentals. Your attorney should provide a complete closing cost estimate specific to your transaction early in the process.

B. Annual Ownership Costs

Property Tax

Bahamian property tax is levied annually and is administered by the Real Property Tax Division. The rate structure as published provides for:

  • ⦁ Owner-occupied residential property: The first US$300,000 of assessed value is exempt for Bahamian citizens; for non-citizen owners the exemption applies differently — rates are modest but do apply from the assessed value
  • ⦁ Non-owner-occupied (including rental) residential property: Rates apply from assessed value; typically in the range of 1% of assessed value for properties above certain thresholds
  • ⦁ Commercial property: Higher rates apply

It is important to note that property tax in the Bahamas is based on assessed value (set by the government assessor), which may differ from market value. Your attorney or a local advisor should confirm the current assessed value and annual tax liability for any property you are considering. Tax arrears are a charge on the property and must be cleared at completion.

Insurance

Windstorm and hurricane insurance is essential in the Bahamas and represents one of the most significant ongoing ownership costs. Post-Hurricane Dorian, the insurance market for the Bahamas (and particularly the Abacos and Grand Bahama) has seen significant premium adjustments. Buyers should:

  • ⦁ Budget hurricane insurance as a major ongoing annual cost line — for prime Out Island properties this can be material
  • ⦁ Understand windstorm deductibles carefully — these are typically a percentage of insured value (e.g., 2–5%), not a fixed dollar amount, and can be substantial
  • ⦁ Ensure any mortgaged property meets the lender's insurance requirements
  • ⦁ Consider flood, content, and liability insurance in addition to windstorm cover for rental properties

Homeowner Association Fees

Gated communities, resort-managed residences, and marina developments typically charge annual HOA or maintenance fees covering common areas, security, amenities, and shared services. For resort-branded properties (such as those at Atlantis or Nassau resort developments), these fees may be substantial and include hotel-level service provisions.

Utility Costs

Electricity costs in the Bahamas are high by North American and European standards, reflecting island power generation economics. For Out Island properties not connected to the main grid, solar, generator, and fuel costs become a primary utility consideration. Water supply varies by island and location — desalination, catchment, or trucked water are common on Out Islands. Factor utility costs into operating budgets, particularly for rental properties.

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