Bermuda – Property Taxes

What is stamp duty on property in Bermuda?

In Bermuda, stamp duty is charged under the Stamp Duties Act 1976 on legal instruments such as property deeds and rental leases, where government stamps are required for authentication. Unlike a flat percentage applied in some other jurisdictions, the amount of stamp duty on a sales transaction is based on a progressive scale depending on the sale price of the property.

Stamp duty is payable on the vast majority of transactions, and ad valorem duty is payable on a sliding scale on land purchases and gifts. At the top end, stamp duty amounts to $64,000 plus 7% of everything over $1.5 million. As a practical illustration, a property selling for $1 million would attract stamp duty of approximately $34,000 before any applicable reliefs.

The cost of stamp duty is usually shared equally between buyer and seller, though the division may be negotiated. When you purchase a property, stamp duty is payable on the day of completion and is included in the closing costs of the transaction; your lawyer will usually handle the payment on your behalf.

Even if you gift a property or swap properties with someone else with no cash changing hands, you still have to pay stamp duty on the market value of the property. It also does not matter if you are buying the property outright or with a mortgage — stamp duty still attaches.

Check the Government of Bermuda’s official stamp duty page for the most current rates, as Parliament updates these periodically.

How does annual land tax work?

Land tax is a real property tax assessed on all developed land in Bermuda, with some exceptions. It is imposed on the Annual Rental Value (ARV) of each unit, payable by the owner. Your land tax rate is based on the annual rental value of your property, as determined by the Department of Land Valuation. This is broadly comparable to how council tax works in some European systems — a government-assessed value drives the annual bill, rather than the actual sale price.

Every five years, the Department of Land Valuation determines the value of every property in Bermuda, and that valuation is a snapshot of the rental market. The Land Valuation Department inspects properties around Bermuda, taking photos and measurements, and uses factors including location, property type, size of accommodation, and amenities such as swimming pools, docks, and tennis courts.

There are six ARV bands for residential properties, with the following rates: 0.60% on ARV up to BMD 11,000; 1.20% on BMD 11,001–22,000; 2.40% on BMD 22,001–33,000; 4.80% on BMD 33,001–44,000; 9.60% on BMD 44,001–110,000; and 18.23% on ARV over BMD 110,001. The tax is progressive, meaning the higher the annual rental value, the higher the percentage of tax payable.

Commercial properties are taxed at 9.5% (from 1 July 2019), while tourist properties are taxed at 8.9%. Properties in an Economic Empowerment Zone are taxed at the lower rate of 7%.

All homeowners and long-term tenants are required to pay land tax twice yearly. If you are 65 years old or over and own and occupy a private dwelling, you can be exempted from up to $1,791 in land tax annually. This exemption only applies to homes with an ARV of up to $45,500, and tax will be due on the value of the ARV in excess of $45,500. You can use the Government of Bermuda’s land tax page and its online ARV calculator to estimate your liability before purchasing.

Is there capital gains tax on property?

There are no income or capital gains taxes in Bermuda for individuals. This is one of Bermuda’s most significant financial distinctions from most developed property markets. In contrast to jurisdictions such as France, Australia, or Canada — where selling an investment property can trigger a capital gains tax bill of 20–30% or more on any profit — Bermuda imposes no such levy at all.

Bermuda does not impose capital gains, inheritance, or wealth taxes. This means that if you purchase a property for $2 million and later sell it for $3 million, the $1 million gain is yours to keep in full, with no government share taken from the profit. The only transactional tax you will encounter on the sale side is stamp duty, which is typically shared between buyer and seller.

There is no corporate income tax or capital gains tax in Bermuda. This applies equally whether the property is held personally or through a company structure, making Bermuda particularly attractive for investors who plan to hold and eventually sell property at a profit.

Is there inheritance or estate tax?

Bermuda does not have an inheritance tax in the conventional sense found in countries like the United Kingdom or Spain. However, this does not mean property passes to heirs tax-free. Bermuda’s system of gift and estate taxes is based on stamp duties charged on instruments used in the process of disposing of real and personal property, regardless of the domicile, residence, or nationality of the parties concerned.

Stamp duty on an inheritance is approached differently from a straightforward sale. A home’s value is pooled with the value of all other assets of the deceased, and all assets and liabilities are itemised in an affidavit of value. The applicable stamp duty rates are: nil on the first $100,000; 5.25% on the next $100,000; 10.5% on the next $800,000; 15.75% on the next $1 million; and 21% on any amount thereafter.

So, if the net value of a deceased’s estate is $500,000, stamp duty (death tax) payable is $36,750. This illustrates that while estate stamp duty is not called “inheritance tax,” it functions similarly and can represent a meaningful cost, particularly for larger estates.

Nowadays, inheriting spouses are exempt from death tax, and the “primary family homestead” concession exempts one home (and no more) of a Bermudian from death tax. Designation of a home as the “primary family homestead,” which can only be applied to one property, reduces a deceased’s estate by the value of that home for death tax purposes. Such designation can be made by the owner while living, or by executors after an owner’s death. Non-Bermudians do not qualify for the primary family homestead concession.

Is there a gift tax on property?

Bermuda does not have a standalone gift tax, but lifetime gifts of Bermuda assets — principally Bermuda real estate — are subject to ad valorem stamp duty. The rates for lifetime gifts (voluntary conveyances) are lower than those applied to estates on death, which is an important estate planning consideration.

Stamp duty for lifetime gifts is calculated at the following rates: 2.5% on the first $100,000 of value; 3.15% on the next $400,000; 4.2% on the next $500,000; 6.3% on the next $500,000; and 7.35% on any value over $1.5 million. Based on these rates, stamp duty for a real estate gift valued at $500,000 is $14,700.

Comparing the two: if a home is the only asset and is valued at $500,000, stamp duty payable after death is $22,050 more than under a voluntary conveyance during the owner’s lifetime. This gap makes lifetime gifting a potentially useful strategy, particularly for owners of multiple properties.

There is no exemption for lifetime gifts to a spouse, but because of the lower rates of duty applicable, lifetime gifts can be an effective means of reducing the value of an estate for estate planning purposes. Stamp duty can also be reduced if the transferring homeowner keeps a lifetime interest in the home. The reduction is based on the Tax Commissioner’s lifespan actuarial table — the older the homeowner, the lesser the estimated lifespan, and so the smaller the tax reduction.

Is rental income from property taxed?

There are no income or capital gains taxes in Bermuda for individuals. This means that rental income received by a private individual from a Bermuda property is not subject to personal income tax — a sharp contrast to jurisdictions such as France, Portugal, or Spain, where rental earnings are typically taxed at rates between 19% and 48% depending on the owner’s tax residency status.

However, a number of fees and levies do apply to rental property. Effective 1 September 2023, Bermuda imposes an annual rental property fee of between BMD 1,500 and BMD 2,500, based on the ARV of the property. Owners must also continue to pay land tax on the property’s ARV, regardless of whether it is occupied or let.

Non-Bermudians who purchase property are not able to rent it out for short-term or holiday rentals unless it is in a specific hotel tourism-designated development. Non-Bermudians may be granted permission to rent their property upon application to the Department of Immigration, subject to a tax of 7.25%.

Effective November 2018, the proprietor of a vacation rental unit or a holder of a vacation rental certificate, or an agent acting on behalf of either, shall pay to the Bermuda tax authorities a vacation rental fee equal to 4.5% of the rack rate charge made in respect of the vacation rental unit. If you plan to let a property as a short-term holiday rental, this fee is an ongoing operational cost to factor into your yield projections.

What extra costs do non-Bermudian buyers face?

Bermuda tightly restricts foreign property ownership, and non-Bermudian buyers face a significant additional cost on top of stamp duty. The licence fee on purchases of freehold properties is 12.5% of the value of the property, while the licence fee for condominiums is 8% of the value. This licence is issued by the Minister of Labour and Home Affairs, and the application is made through a local attorney.

Permanent Resident Certificate (PRC) holders are treated differently to other foreign purchasers, and the applicable licence fee is 6% of the property value. Non-Bermudian spouses and domestic partners of Bermudians are permitted to acquire real estate in Bermuda without a licence.

To put these costs in perspective: a non-Bermudian purchasing a house for $2 million would face a licence fee of $250,000 (12.5%), on top of stamp duty of approximately $99,000 at prevailing rates — a combined transaction cost approaching $350,000 before legal fees. This underscores why careful financial planning and professional legal advice are essential for non-Bermudian buyers.

Properties available to non-Bermudian purchasers are limited: houses with a qualifying ARV start at approximately $2,500,000 and condominiums at approximately $320,000. The effect of these guidelines means that only the highest-valued properties are available to non-Bermudian purchasers. A non-Bermudian is permitted to own up to two properties and is not permitted to acquire vacant land.

The Government of Bermuda’s tax overview page provides a summary of all taxes applicable to property owners and is a useful starting point before engaging legal counsel.

What are the tax advantages of buying property in Bermuda?

Bermuda’s tax framework offers genuinely substantial advantages for property owners compared to most international markets. The absence of several major taxes that property owners commonly face elsewhere — income tax, capital gains tax, and wealth tax — fundamentally changes the economics of owning real estate on the island.

There are no direct wealth taxes in Bermuda. Bermuda does not impose a wealth tax. This means that holding property of high value does not in itself generate an ongoing tax liability beyond land tax and the annual rental property fee — unlike France’s Impôt sur la Fortune Immobilière (IFI), which taxes real estate wealth above approximately €1.3 million at rates up to 1.5% annually.

The Bermuda Government has recently amended the Stamp Duties Act 1976 to make it more affordable for first-time buyers. Any first-time home buyer purchasing a property worth up to $1,000,000 will not have to pay any stamp duty. The amendments also made it so that first-time buyers are exempt from stamp duty on the first $1,000,000 of the purchase price. If an individual purchases a $1,200,000 home, they would only be charged stamp duty on $200,000, as the purchase price is $200,000 more than the $1,000,000 exemption limit.

The Bermuda Government is also committed to helping those with mortgages save money. Amendments to the Stamp Duties Act 1976 exempt homeowners with a mortgage of $1,000,000 or less from paying stamp duty if they refinance their mortgage with another financial institution, provided they are not increasing the amount borrowed.

Owning through a company or trust can provide asset protection, succession planning benefits, and potential tax efficiencies, but requires adherence to Bermuda’s regulatory requirements. For those with complex estates or multiple international assets, a Bermuda trust structure may offer meaningful advantages in managing the incidence of estate stamp duty.

After death, a home designated as a primary family homestead is transferred to heirs free of death tax. A home can be registered as a primary homestead either before or after the owner’s death. For Bermudians, this is a powerful planning tool that can eliminate what would otherwise be the largest tax event associated with residential property.

How do I calculate my total purchase tax costs?

Calculating the full tax cost of a Bermuda property purchase involves combining several elements: stamp duty on the transaction, the non-Bermudian licence fee (if applicable), and the ongoing annual land tax. Here is a step-by-step approach to working out your costs as a buyer.

1. Determine your buyer status. Establish whether you are a Bermudian, a Permanent Resident Certificate holder, a non-Bermudian spouse or domestic partner of a Bermudian, or a non-Bermudian buyer. Your status determines both eligibility for a licence and the fee rate that applies.
2. Calculate stamp duty on the sale price. Apply the progressive scale to the agreed purchase price. For example, a $750,000 property attracts: 2% on the first $100,000 ($2,000) + 3% on the next $400,000 ($12,000) + 4% on the remaining $250,000 ($10,000) = $24,000 total stamp duty, typically split equally between buyer and seller.
3. Apply any stamp duty relief. There are stamp duty exemptions for Bermudian first-time home buyers (provided certain criteria are met) up to the first USD 1 million of consideration. Confirm with your solicitor whether you qualify before completing the calculation.
4. Add the non-Bermudian licence fee (if applicable). The licence fee on freehold properties is 12.5% of the value; for condominiums it is 8%. This is paid separately from stamp duty and can significantly exceed it on high-value properties.
5. Find the property’s Annual Rental Value (ARV). All annual rental values of property in Bermuda are determined by the Department of Land Valuation under the Land Valuation and Tax Act 1967, and these values are used in land tax payments. You can search your property’s ARV at landvaluation.bm.
6. Calculate your annual land tax. Apply the appropriate residential or commercial rate to the ARV. A property with an ARV of $50,000 falls in the 9.60% band, producing an annual land tax bill of approximately $4,800, paid in two instalments.
7. Budget for ancillary costs. Additional costs may include an appraisal fee (from $450 upwards), pro-rated land taxes at closing, a structural survey fee, property insurance, service charges for utility installation, and maintenance fees for condominiums.

Frequently asked questions

Does Bermuda have a capital gains tax on property sales?

There are no income or capital gains taxes in Bermuda for individuals. Any profit made when selling a property is entirely tax-free. The only transaction tax on a sale is stamp duty, which is typically shared between buyer and seller.

What is the “primary family homestead” and how does it help?

Designation of a home as the “primary family homestead” — which can only be applied to one property — reduces a deceased’s estate by the value of that home for death tax (estate stamp duty) purposes. The designation can be made by the owner while living, or by executors after the owner’s death. This concession is available to Bermudians only.

Do non-Bermudians pay higher taxes on Bermuda property?

Yes, significantly so. In addition to stamp duty — which is the same for all buyers — non-Bermudian purchasers of freehold properties pay a licence fee of 12.5% of the property’s value, while the fee for condominiums is 8%. PRC holders pay a reduced licence fee of 6%. These fees are separate from and additional to stamp duty.

Is rental income from a Bermuda property subject to income tax?

No. There is no personal income tax in Bermuda, so rental income received by a private individual is not taxed as income. However, effective 1 September 2023, Bermuda imposes an annual rental property fee of between BMD 1,500 and BMD 2,500, based on the ARV of the property. Non-Bermudian landlords also require immigration permission to let and are subject to an additional 7.25% tax on rental receipts.

How often is the Annual Rental Value (ARV) reassessed?

Every five years, the Department of Land Valuation determines the value of every property in Bermuda. The 2020 revaluation was cancelled due to the Covid-19 pandemic, and the next revaluation was due to take place in 2025. If you believe your ARV is set too high, you have the right to formally object to the Department of Land Valuation.

Can lifetime gifting of property reduce estate stamp duty?

Yes. Stamp duty is typically lower for lifetime gifts than for those inherited. There is no exemption for lifetime gifts to a spouse, but because of the lower rates of duty applicable, lifetime gifts can be an effective means of reducing the value of an estate for estate planning purposes. Always seek professional legal advice before making a gift of real estate.

Are there any wealth taxes in Bermuda?

There are no direct wealth taxes in Bermuda. There is no wealth tax in Bermuda. The absence of a wealth tax, combined with no capital gains tax, means the ongoing annual costs of holding property are limited to land tax and the annual rental property fee.

What stamp duty relief exists for first-time buyers?

The Bermuda Government has amended the Stamp Duties Act 1976 to help first-time buyers. Any first-time home buyer purchasing a property worth up to $1,000,000 will not have to pay any stamp duty. Additionally, first-time buyers are also exempt from stamp duty on the first $1,000,000 of the purchase price for properties above that threshold — so a buyer purchasing a $1,200,000 home is only charged stamp duty on $200,000. This relief applies to Bermudian first-time buyers who meet the qualifying criteria.

Is there VAT or sales tax on property transactions in Bermuda?

There is no VAT or sales tax in Bermuda. There is also no transfer tax imposed in Bermuda. The primary transaction tax is stamp duty, supplemented by the non-Bermudian licence fee where applicable. This straightforward structure makes budgeting for a purchase more predictable than in many other jurisdictions.