Business

Concessions expanded for prospective property buyers

Government’s 2022/2023 budget lays out a plan to help Bahamians acquire property and build and renovate homes by relaxing certain taxes, Prime Minister and Minister of Finance Philip Davis revealed during his budget presentation yesterday.

The budget also increases the maximum cap on property taxes for owner-occupied property from $60,000 to $120,000, placing a heavier real property tax (RPT) burden on those who can afford more luxurious properties.

Guardian Business reached out to the real estate sector for a response on some of the changes, but those industry stakeholders said they were still getting an understanding of what changes the government made in its budget.

There were some concerns, though, over how the maximum cap change could affect the real estate appetite of high-net-worth buyers and owners.

Davis said during his presentation that the government wants to encourage Bahamians to invest in their country, and so introduced a number of incentives to assist with home purchases.

“For Bahamians who dream of home ownership, this dream can soon become a reality,” said Davis.

“Currently, concessions are available for persons who purchase a home for the first time. We are expanding these concessions so that people who purchase a home, or purchase land and construct their first home, or purchase a house and renovate it to be their first home, will receive the same level of concession.

“For those who are constructing or renovating their first home, we also are refunding up to $40,000 in cash for any VAT (value-added tax) paid for construction services or materials purchased, once the occupancy certificate is provided within eighteen months of the commencement of construction.

“We are also increasing the level of exemption for first home buyers from $250,000 to $300,000 and reducing VAT on property transfers below $1 million for individuals. We are increasing the real property tax exemption on owner-occupied properties from 250k to 300k.”

The government has taken a hardline approach to RPT collection since coming to office, and is predicting in this upcoming budget to collect $169.4 million, said Davis.

He explained that while this figure would be a 6.7 percent improvement over the previous budget year, it remains short of the $280 million worth of invoices sent out annually to eligible taxpayers.

“We have already begun the process of improving government revenues by reconstituting the Revenue Enhancement Unit,” said Davis.

“Among other benefits, this will ensure equity in government taxation, and increase the yields on our real property tax. Property taxes increased by an estimated $9.8 million to $96.6 million.”

Besides increasing the maximum cap on RPT, Davis also announced that the government will update its laws so that it can take action against all types of property owners who fail to pay taxes. The government currently does not have the ability to seize owner-occupied property owned by a foreigner. It can only seize vacant land owned by foreigners.

“To demonstrate that we are serious about collecting property tax, we are updating the law to simplify the process by which we can take action against all classes of property owners, with the exception of Bahamian owner-occupied properties,” Davis said.

“We are now imposing a minimum tax fee of 75 percent of the real property tax assessment for high-end properties which are exempt from property tax because they are in a rental pool, if these properties do not generate VAT revenue equivalent to the real property tax assessment.”

Davis also announced yesterday that the government has chosen to make all property owned by religious organizations, trade unions, civic organizations and burial societies exempt from paying RPT, so that the money they save can allow them to carry out more community outreach.

Davis announced that the government will also eliminate VAT on property transfers between joint tenants of property, eliminate “nuisance fees” in the Stamp Act documents unrelated to the transfer of property or the registering of a financial instrument, and reduce real property rates on commercial property in order to spur local investment.

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Chester Robards

Chester Robards rejoined The Nassau Guardian in November 2017 as a senior business reporter. He has covered myriad topics and events for The Nassau Guardian. Education: Florida International University, BS in Journalism

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