Bahamas real estate investors seem to be in high spirits over the recovery in the economy. Nearly $400 million of real estate has been sold or signed contracts over Bahamas Realty the last quarter of 2021. Transactions nearly tripled as opposed to pre-Cryanza activity. This sudden surge partly has to do with the fact that there already being very high demand for real estate on this island prior to the outbreak.
The demand is so high because of a number of factors. One, because of the huge amount of people emigrating to the United States, many of these people have already purchased a home. Two, the Caribbean is an attractive location to live in for its temperate climate and wonderful lifestyle. And third, many families already have a home or are looking for a home to purchase, therefore they are more open to offers and negotiations than ever before. Many Bahamas real estate investors are motivated by the potential to make large profits. Others simply like to vacation and they may just be looking to purchase a property that will provide them with a relaxing place to visit and stay during their trips to the Caribbean.
Real estate investing in the Bahamas does involve some form of financial risk. If the market starts to go south, as it often does, a potential investor would lose a great deal of money. Investors dealing with Bahamas real estate should know about the laws regarding stamp duty. This is charged when a homeowner purchases a house or property in Bahamas and applies it to the selling price of the property.
When an investor is purchasing property in the Bahamas, they will also need to know about other taxes that may be due. A property owner may be required to pay tax on any sale of real estate within the islands. The amount that the Bahamian government levies in stamp duty depends on which island the property is located. This can become an issue for those who are trying to purchase a property to live in the islands with the highest rates of taxation. Investors can take advantage of a few different methods of getting around this issue.
One way that investors can use the vacation rentals clause in the Bahamas real estate investment agreement is to purchase property in one of the islands in the Bahamas, then rent it out at times that are mutually convenient to both the investor and the owner of the property. For example, an investor would purchase an oceanfront property in the Bahamas, rent it out during the year, then purchase another piece of the same property in the same island during the off season. These properties will each sell for a profit, and the investor will in turn pay the Bahamian government the difference between the purchase price and the rental rate. This method of flipping real estate has been used for years and is perfectly legal.
Other ways that investors can make a profit on their Bahamas real estate investments include using rental yields to secure loans for buyers. Rental yields are a percentage of the value of a piece of real estate that is being rented out. In exchange for paying rent, the Bahamian government issues a tax credit to the landlord on the amount of rental yields that are paid. This allows landlords to fund the purchase of more Bahamian real estate for sale to buyers, increasing the amount of potential buyers and thus the profits on Bahamas real estate investing.