Recently, the Nassau Guardian published an article discussing the recent removal of the property tax cap (which was previously $35,000) and the repeal of the cap elimination that BREA is calling for. We agree with BREA that this cap elimation will now have a chilling effect on second home sales, and may turn out to be detrimental to our economy. We hope BREA is successful in acheiving the repeal.
An abridged form of the article can be seen below.
“Call for mid-year property tax repeal”
By: Inderia Saunders
The head of the realtor’s association is calling on government to revisit a decision to remove a $35,000 property tax ceiling, asserting it makes this market a tougher sell for agents already on the losing-end of the global downturn.
“They need to revisit that because it’s making The Bahamas uncompetitive in the region,” William Wong, president of the Bahamas Real Estate Association (BREA), told Guardian Business in a recent interview. “We are very concerned about [attracting] second home buyers in the Family Islands.”
It’s a concern rooted in the government’s move last summer to eliminate the $35k cap on real property tax. It means the owner of a $20 million home, for example, will now pay about $150,000 per year in taxes instead of the former $35,000 maximum. The startling increase comes despite the prime minister’s move to lower the tax rate for properties valued in excess of $5m to 0.75%, from what was then 1%.
….However, Wong asserts that in a tough economy, where international buyer appetite for second homes is drying up quickly, a bump up in taxes for wealthy foreign investors threatens to do more harm than good for government coffers. “….So we’re not in the most competitive mode right now.”
His comments come as real estate markets all over the world report sluggish sales and slashed home values. It’s no different here in The Bahamas, where many high-end properties tailored to second home buyers are now languishing on the market.
Going into the New Year, Wong believes sales to American and other international buyers will only pick up with government intervention.
“Things are a bit shabby right now,” he said. “They’re not going to pick up unless the government revisits that property tax issue.”