Bahamas – Property Taxes

What taxes and fees apply when buying a property in the Bahamas?

Beyond the purchase price itself, the principal completion costs in a Bahamian real estate transaction are the VAT-based property transfer charge, legal fees, and the agent’s commission. Knowing precisely how each cost is calculated — and which party bears it — is essential before you commit to a purchase.

Property Transfer VAT

Property transfer tax in the Bahamas operates through a VAT framework that superseded the previous flat stamp duty system. The rate you face depends on both the value of the property and your buyer status. Foreign purchasers are typically subject to a flat 10% VAT on property transfers, while Bahamian citizens benefit from a graduated scale that can fall as low as 2.5% based on property value, with a preferential 4% rate available to qualifying first-time homebuyers.

The graduated VAT schedule for Bahamian citizens (as of 2025) is as follows, per the Alexiou Knowles & Co legal guide:

• Up to $100,000: 5%
• $100,001–$300,000: 4%
• $300,001–$500,000: 6%
• $500,001–$700,000: 8%
• $700,001–$1,000,000: 9%
• Over $1,000,000: 10%

In the majority of transactions, the property transfer VAT is divided equally between buyer and seller, though how this cost is allocated remains negotiable and may be varied by the terms set out in the sale agreement. Always confirm the current schedule with the Department of Inland Revenue (DIR) before exchanging contracts.

Legal Fees

Legal fees in Bahamian real estate transactions are ordinarily calculated as a proportion of the property’s value. The Bahamas Bar Association’s suggested scale provides for a fee of 2.5% plus VAT when an attorney acts for one side in a transaction, though this percentage may be reduced for higher-value properties. Both buyer and seller retain separate legal representation. This structure is broadly comparable to conveyancing cost frameworks in Australia or the UK, although the Bahamian model uses a percentage-based scale rather than hourly billing.

VAT on Professional Services

Since July 2018, the Bahamian government has applied a 12% VAT to all goods and services throughout the country, including real estate services, appraisals, legal work, title searches, commissions, and insurance. This charge sits on top of all professional fees quoted, and buyers should factor it in across every service engaged during the transaction.

Real Estate Agent Commission

Agent commissions in the Bahamas typically run at 6% of the sale price for developed property and 10% for vacant land, plus 12% VAT. Under a standard “gross” sale arrangement the seller bears the commission; under a “net” sale structure all costs fall to the buyer. Establish clearly which basis applies before you submit an offer.

How to Apply: Buying Process Step by Step

1. Instruct a local attorney. Every purchaser requires a locally qualified Bahamian attorney to act on their behalf throughout the acquisition of real property.
2. Agree heads of terms and sign a Sale and Purchase Agreement. Your attorney will review the title deeds and conduct the necessary searches on your behalf.
3. Obtain a property appraisal. For VAT assessment purposes, the VAT Comptroller may weigh both the agreed purchase price and an independent appraisal, and is entitled to apply whichever figure is higher.
4. Obtain a VAT invoice. A VAT invoice from the Comptroller of Inland Revenue must be secured before any conveyance of real property can be executed.
5. Execute the conveyance deed and pay VAT/transfer tax. Once the conveyance has been executed, the full VAT amount invoiced must be settled within 180 days.
6. Register the transaction. Non-Bahamian buyers are required to register the acquisition with the Investments Board under the International Persons Landholding Act. Certain property types additionally require a permit (see the foreign buyers section below).
7. Pay annual real property tax. Following transfer of ownership, the property will be assessed and an annual real property tax liability will arise.

Worked Example: Buying a $500,000 Residential Property as a Foreign Buyer

Note: under a “net” sale arrangement, the buyer also absorbs the seller’s half of the transfer VAT and the agent’s commission, which can push total buyer costs toward 15–22% of the purchase price. Always establish the sale basis in the Sale and Purchase Agreement and verify all current rates with the Department of Inland Revenue and your attorney before completing.

What taxes and fees apply when selling a property in the Bahamas?

Under a standard “gross” sale arrangement, the vendor is responsible for the agent’s commission, their share of the VAT on the conveyance, and their own legal fees. There is no separate seller’s transfer tax or capital gains levy on top of these — the VAT on the conveyance represents the primary government charge, shared between the two parties unless the contract specifies a different arrangement.

Seller’s Costs Summary

• Half of the property transfer VAT (typically 5% of the purchase price in a gross sale for foreign-buyer transactions valued over $1m, or the relevant rate from the graduated scale for the applicable price band)
• Real estate agent commission: Ordinarily 6% of the sale price for developed property and 10% for vacant land, plus 12% VAT on the commission amount.
• Seller’s legal fees: Approximately 2.5% of the property value plus 12% VAT, payable to the seller’s own legal representative.

Outstanding real property taxes can materially affect a transaction, since unpaid amounts constitute a statutory first charge against the property. A seller must ensure all real property tax arrears are cleared before or at completion, as any outstanding balance will need to be discharged from the sale proceeds.

Worked Example: Selling a $500,000 Residential Property

These figures are provided for illustration only. Actual costs will depend on whether the transaction is structured as a gross or net sale and on the agreed commission rate. Verify all figures with a local attorney and check current rates at the Department of Inland Revenue.

Is capital gains tax payable on property sales in the Bahamas?

The Bahamas levies no personal income tax, no rental income tax, no capital gains tax, no inheritance tax, and no estate tax. This places it in a distinctly different category from most other jurisdictions — unlike the UK (where CGT on residential property is charged at 18%–28%), Canada (where 50% of gains are included in taxable income), or Australia (which applies a 50% discount on gains after 12 months), the Bahamas imposes absolutely no tax on profit arising from a property sale.

Any gain realised on the disposal of real estate is therefore entirely free of Bahamian tax. This applies to both residents and non-residents without distinction, and there are no primary residence conditions, minimum ownership periods, or other qualifying criteria to satisfy — because no capital gains tax regime exists at all.

Practical Example

Suppose you acquire a beachfront villa for $800,000 and sell it five years later for $1,200,000. The $400,000 gain attracts no Bahamian taxation whatsoever. Your only disposal costs will be the transfer VAT, agent’s commission, and legal fees as described elsewhere in this guide. You should nonetheless consider whether your country of tax residence may seek to tax the same gain under its own domestic rules — taking advice from a tax professional in your home jurisdiction before completing any sale is strongly recommended.

The Bahamas is widely regarded as a tax-neutral environment given its absence of income tax, capital gains tax, inheritance tax, and corporate income tax. This is a central draw for internationally mobile buyers. Confirm the prevailing position with the Department of Inland Revenue and a locally qualified adviser before relying on this for planning purposes.

Are there annual property taxes in the Bahamas?

Real property tax is a statutory requirement in the Bahamas. It is levied each year on the assessed market value of property situated within the country, with the applicable rate determined by the classification and value of the asset. The system is broadly analogous to council tax in the UK or municipal rates in Australia, though Bahamian rates are generally more modest.

Owner-Occupied Residential Property

For owner-occupied homes, the first $300,000 of assessed value carries no tax liability. The portion of value between $300,000 and $500,000 is taxed at 0.625% per year, and any value above $500,000 attracts a rate of 1% per annum. To retain owner-occupier status and the associated lower tax treatment, the owner must reside at the property for at least six months in any given year.

Non-Owner-Occupied (Commercial/Rental) Property

For commercial or non-owner-occupied properties, the annual rate is 1% on the portion of market value up to $500,000, rising to 2% per annum on any value exceeding that figure.

Unimproved (Vacant) Land

Bahamian nationals are not subject to real property tax on unimproved land. For foreign owners, a separate rate schedule applies — consult the Department of Inland Revenue for current figures, as these differ from residential property rates.

Exemptions and Special Cases

Buildings listed on the National Register of Historical Buildings may qualify for a real property tax exemption; however, this relief is not granted automatically and must be formally applied for, even where a property already appears on the Historical Buildings List.

All islands are subject to real property tax except Freeport, which continues to operate under the protections of the Hawksbill Creek Agreement. Bahamian citizens on the Family Islands are presently exempt from property tax — only foreign owners are liable on those islands.

Payment Deadlines and Penalties

Annual real property tax falls due on 31 March each year. A 10% discount is available to those who settle their liability in full by that date. Any tax remaining unpaid after 31 December in the relevant tax year attracts a 5% surcharge from 1 January. Continued non-payment may result in the Treasurer placing a statutory lien on the property, and prolonged default can ultimately lead to the government acquiring it through due legal process.

Annual Tax Example on a $750,000 Owner-Occupied Home

These figures are illustrative and reflect rates current as of 2025. Always confirm the assessed value and applicable rate for your specific property with the Department of Inland Revenue.

How is rental income from property taxed in the Bahamas?

Rental income is not subject to any form of income tax in the Bahamas. This holds equally for residents and non-residents — there is no withholding tax deducted from rents paid to overseas landlords, setting the Bahamas apart from the vast majority of jurisdictions where rental receipts are routinely caught by income tax.

Business Licence Requirements

Property owners who let out real estate are generally obliged to hold a current business licence. These licences must be renewed each year, with fees ordinarily ranging from US$250 to US$1,250, though higher charges may apply where profits exceed certain levels. Check the current fee schedule with the Department of Inland Revenue, as these figures are subject to change.

Short-Term Rentals (Airbnb and Similar Platforms)

Owners of residential properties who intend to let rooms or entire homes to visitors must register for that purpose. Rental licences can be obtained through the local Family Island Administrator’s Office or, in Nassau, through the Hotel Licensing Department of the Bahamas Ministry of Tourism and Aviation.

Where a rental arrangement extends beyond 45 days, no VAT is charged on the rent, as the arrangement is treated as a residential tenancy. For shorter-term lets of 45 days or fewer — typically encompassing platforms such as Airbnb and VRBO — VAT at the prevailing rate (12% as of 2025) is applicable to the rental income. Landlords operating in this space should register for VAT if their annual rental turnover exceeds the registration threshold; confirm current thresholds with the Department of Inland Revenue.

Note on Home Jurisdiction Tax

Although the Bahamas imposes no tax on rental income, your country of tax residence may have its own rules that catch income earned abroad. Property owners who remain fiscally resident elsewhere — for instance in France, Germany, or Canada — should engage a cross-border tax specialist to understand their reporting and payment obligations at home. The Bahamas maintains a limited network of tax information exchange agreements and does not have broad double-taxation treaties covering rental income in the manner common among larger economies.

Does inheritance tax apply to property in the Bahamas?

The Bahamas imposes no personal income tax, inheritance tax, or wealth tax. Property passing on death carries no Bahamian estate or succession tax liability, regardless of the estate’s size or the nationality of those inheriting it. This stands in sharp contrast to jurisdictions such as the UK — where inheritance tax applies at 40% above a threshold — or the United States, where federal estate tax bears on large estates.

Owners may pass property freely to heirs without any Bahamian inheritance charge, or may use qualifying real estate investment to apply for Economic Permanent Residency where the acquisition meets the $1 million threshold. Where an interest in immovable property is acquired through inheritance, no permit under the International Persons Landholding Act is required — registration alone is sufficient. This means foreign heirs receiving Bahamian property by inheritance do not need government consent; they simply complete the registration formalities.

While no Bahamian inheritance tax applies, heirs who are tax resident abroad may face estate or inheritance tax liabilities in their own jurisdictions on foreign-held assets. The Bahamas does not currently operate a comprehensive network of estate tax treaties. Always engage a lawyer with expertise in both Bahamian law and your home-country law when planning around the succession of Bahamian property.

Does gift tax apply to property transfers in the Bahamas?

The Bahamas operates a broadly tax-neutral environment, with relief from income, capital gains, wealth, inheritance, succession, gift, and corporate income taxes. There is accordingly no Bahamian gift tax on lifetime transfers of property between individuals, irrespective of the value of the asset transferred or the relationship between the parties.

There are, however, important VAT considerations to understand. An inter vivos gift of real property made to an immediate family member will be exempt from VAT, unless the recipient subsequently sells or transfers the property within seven years of receiving it to someone outside the immediate family circle, or charges the property to a regulated financial institution by way of mortgage within that period. This seven-year condition is significant: failure to satisfy it may result in VAT becoming payable on the original gift value. Gifts to individuals who are not immediate family members do not attract this exemption in the first place.

Subject to the VAT provisions described above, inter vivos gifts of real property that the recipient holds for a minimum of seven years from the transfer date are exempt from VAT. Anyone contemplating gifting Bahamian real estate should have their attorney scrutinise the current VAT rules thoroughly and carefully consider the seven-year retention requirement before proceeding. Verify current rules with the Department of Inland Revenue.

Are there any tax advantages or incentives for buying property in the Bahamas?

The Bahamas provides a range of incentives and pathways that hold particular appeal for foreign property purchasers and investors, making it a compelling destination for those seeking a second home, an investment asset, or a route to residency.

Economic Permanent Residency (EPR)

The Economic Permanent Residency programme requires a minimum investment of $1,000,000 (as of January 2025) in Bahamian real estate. An investment of $1,000,000 or more in residential property qualifies for full Economic Permanent Residency, while an investment of $250,000 or more qualifies for an Annual Homeowner’s Residence Card. This pathway is broadly comparable to investor residency programmes offered by countries such as Portugal or Spain, though without the complex ongoing tax obligations those schemes can generate for participants.

First-Time Home Buyer Relief

Qualifying Bahamian first-time homebuyers benefit from a reduced VAT rate of 4% on property transactions priced between $300,000 and $500,000 — lower than the rate that would otherwise apply under the standard graduated scale. This relief is available to Bahamian citizens only; non-citizen buyers should not assume eligibility without confirming the position with a local attorney.

REIT Investment Incentive

In 2024 the Bahamian government introduced favourable VAT provisions for locally registered REITs, under which the acquisition of an interest representing no more than 10% of the issued shares in a REIT registered as a fund with the Securities Commission may be zero-rated for VAT purposes. This creates a practical structure for investors seeking exposure to Bahamian real estate without taking on direct property ownership.

Freeport, Grand Bahama

Freeport continues to operate under the Hawksbill Creek Agreement, which confers substantial tax concessions on businesses and property owners located there. The terms of this agreement have been renewed on several occasions; consult local counsel for the current status and its relevance to any proposed purchase in that area.

No Ongoing Income or Wealth Tax

Beyond specific programmes, the fundamental attraction lies in the Bahamas’ broader tax environment: no personal income tax, no rental income tax, no capital gains tax, no inheritance tax, and no estate tax. For owners of high-value property, the annual real property tax charge is modest compared with equivalent obligations in France (taxe foncière and the IFI wealth tax), Spain (IBI and wealth tax), or the United States (where property tax rates commonly run at 0.5%–2% of value annually with no exemption threshold).

Do different rules apply to foreign buyers or non-residents purchasing property in the Bahamas?

Non-Bahamian nationals may purchase property in the Bahamas without restriction. The primary legislative framework governing such purchases is the International Persons Landholding Act (IPL Act), which has been amended on several occasions — most recently in July 2024, when new compliance requirements relating to VAT payment and property tax registration following a permit grant were introduced.

When Is a Permit Required?

Where a foreign buyer is acquiring real estate exclusively for single-family residential use — whether as a primary residence or a vacation home — no permit is required as a precondition of completion. The buyer simply registers the acquisition after closing. A permit from the Bahamas Investment Board is, however, required for undeveloped land of two or more acres, property that will not be owner-occupied (such as a purely investment-driven rental purchase), or any commercial real estate.

Where the IPL Act mandates a permit, that permit must be obtained before the transaction closes; a conveyance executed without one would be void in law.

Higher VAT Rate for Foreign Buyers

Foreign purchasers are generally subject to a flat 10% VAT on property transfers, whereas Bahamian citizens benefit from a graduated scale ranging from 2.5% to 10%. This difference is financially meaningful on mid-range properties. On a $500,000 purchase, a foreign buyer faces total transfer VAT of $50,000 (ordinarily shared equally between buyer and seller), whereas a Bahamian citizen purchasing the identical property at the same price would incur only 6%, amounting to $30,000 in total. Always confirm the rate applicable to your specific status with the Department of Inland Revenue.

Exchange Control Registration

Provided the original purchase is registered with the Exchange Control Department of the Central Bank of the Bahamas at the time of acquisition, the full sale proceeds — including any profit — may be freely repatriated on a future disposal. Failing to register at the outset can create significant complications when you later seek to remove funds from the country. Your attorney should incorporate this step into the standard closing process.

Property Tax on Family Island Properties

Bahamian citizens residing on the Family Islands are presently exempt from real property tax — a concession that does not extend to foreign owners. If you are purchasing on islands such as Eleuthera, the Exumas, or Abaco, annual real property tax should be factored into your cost projections even where Bahamian neighbours face no equivalent charge.

Annual Homeowner’s Residency

An annual residency card is available to any individual who owns Bahamian real estate, regardless of the purchase price, and may be renewed each year. The card entitles the holder and their family to reside in the Bahamas for the duration of the permit. This provides a flexible option for buyers who want to spend extended periods in the country without pursuing full permanent residency.

Frequently asked questions about property taxes in the Bahamas

Do I pay any tax on the profit when I sell my Bahamian property?

No. Profit arising from the sale of real estate in the Bahamas is entirely free of Bahamian tax. There is no capital gains tax applicable to either residents or non-residents. That said, if you are tax resident in another country, that country’s domestic rules may still capture your gain — always consult a tax adviser with expertise in your country of residence before completing a sale.

Who is responsible for paying the property transfer VAT — the buyer or the seller?

Standard Bahamian practice is for the transfer VAT to be divided equally between buyer and seller, though the allocation of this cost is negotiable and may be varied by agreement. Under a “net” sale arrangement, the buyer assumes the entire cost. Review the Sale and Purchase Agreement carefully with your attorney to establish which basis governs your transaction.

Is there a deadline for paying annual real property tax?

Annual real property tax is due by 31 March each year. Full payment by that date earns a 10% discount on the current year’s bill. Any balance remaining unpaid after 31 December attracts a 5% surcharge from 1 January the following year. Payments may be made online through the Department of Inland Revenue portal or settled in person.

Do I need government approval to buy property in the Bahamas as a non-citizen?

A foreign buyer purchasing solely for single-family residential use does not need a government permit as a condition of closing — registration of the acquisition after completion is all that is required. A formal permit from the Investments Board is necessary for commercial purchases, large tracts of unimproved land, or investment properties not earmarked for owner-occupation. A local attorney will be able to advise which category applies to your proposed purchase.

Will my rental income in the Bahamas be taxed?

Rental income from Bahamian property is not subject to income tax in the Bahamas. Short-term lettings of 45 days or fewer may create a VAT obligation. A business licence is ordinarily required for landlords and must be renewed on an annual basis. If you remain fiscally resident in another country, that country’s rules on overseas rental income will continue to apply to you regardless of Bahamian treatment.

What happens to my Bahamian property when I die — is it taxed?

No inheritance tax exists in the Bahamas. Property transfers to beneficiaries on death free of any Bahamian estate or succession charge. Foreign heirs need only register the transfer under the International Persons Landholding Act — no government permit is required where property passes by inheritance. Note that the domestic rules of your heirs’ country of residence may apply to inherited overseas assets.

Can I gift property to a family member without paying tax?

A lifetime gift of real property to an immediate family member is exempt from VAT, on condition that the recipient holds the property for at least seven years and does not mortgage it to a regulated financial institution within that period. No gift tax exists in the Bahamas. Where the seven-year holding condition is not satisfied, VAT may become payable on the transaction. Seek advice from a local attorney before gifting any Bahamian property.

Where can I get official information on Bahamian property taxes?

The primary official sources are the Department of Inland Revenue (DIR) for real property tax and VAT on transactions, and the Government of the Bahamas official portal for wider legislation. The Bahamas Real Estate Association (BREA) also provides guidance on transaction costs and agent regulations. Always confirm current rates and thresholds with a locally qualified attorney or tax adviser before committing to any purchase or sale, as rates and regulations are subject to change.