Are You Missing Out on Tax Incentives for First-time Homeowners?

In the past few years, the Government of The Bahamas has been introducing tax incentives to encourage Bahamians to own a home. The latest round of new incentives is found in the Value Added Tax (Amendment) Act, 2022, and the Stamp (Amendment) Act, 2022 which became law last July.

First-Time Bahamian Buyers are Exempt from paying VAT

The first-time Bahamian buyer of a dwelling of less than $300,000 in value is exempt from paying Value Added Tax (“VAT”) on the conveyance to the buyer. Where the Bahamian buyer gets a mortgage to purchase this property, then that mortgage is exempt from VAT too.

Where the value of the dwelling exceeds $300,000 but does not exceed $500,000 then the Bahamian first-time buyer pays 4%.

Buying Real Estate in Personal Name vs. Company Name

Where a buyer is purchasing another property in their personal name, the VAT on the conveyance is calculated:-

• 2.5% of the purchase price, where the purchase price does not exceed $100,000,
• 4% of the purchase price, where the purchase price exceeds $100,000 but does not exceed $300,000,
• 6% of the purchase price, where the purchase price exceeds $300,000 but does not exceed $500,000,
• 8% of the purchase price, where the purchase price exceeds $500,000 but does not exceed $700,000,
• 9% of the purchase price, where the purchase price exceeds $700,000 but does not exceed $1 million, and
• 10% of the purchase price, where the purchase price exceeds $1 million.

Where the buyer purchases real estate in a company name and not the buyer’s personal name, the VAT on the conveyance is calculated at 10% of the purchase price regardless of the purchase price.

VAT Refund for First-Time Buyers

Bahamians may now be eligible for a refund of the VAT paid in connection with the construction or renovation of their first home. The criteria for eligibility and the refund process are outlined in the VAT Regulations and VAT Rules.