By NEIL HARTNELL
Tribune Business Editor
The Government has been urged to “correct” the practice of basing Stamp Duty on real estate ‘market value’, as opposed to ‘conveyancing value’, one realtor warning the uncertainty threatened to leave sales “up in the air”.
Acknowledging that the Treasury was not doing this as frequently as before, John Christie, vice-president at H. G. Christie, told Tribune Business: “One thing I’d like them [the Government] to correct, but I don’t know if they will, is the uncertainty put in by the FNM, with the Stamp Duty based on the market value, not on the conveyance.
“If the Treasury feels it was sold below value, they will not accept the conveyance price. They want you to get an appraisal.”
The practice, instituted under the former Ingraham administration, saw the Treasury refuse to accept Stamp Duty payments based on conveyances they felt were undervalued - sometimes deliberately - to minimise tax payments.
The move caused some outcry from Bahamian realtors, who argued that the Treasury was basing so-called ‘market values’ on pre-2008 prices when the market was booming, and failed to account for the fact there was a recession.
While the Treasury had reduced its insistence on this, Mr Christie said: “They’re only doing it in extreme cases, but it puts transactions somewhat up in the air, because if the seller tells the buyer they do not know what Stamp Duty they will pay, that stops the market.
“Sometimes people do want to sell, to get rid of it, and don’t mind selling at 50 cents on the $1. There’s no trickery, there’s no money going around the sides, but I guess it’s understandable.”
Meanwhile, Peter Dupuch, president of ERA Dupuch Real Estate, told Tribune Business that it should only have dropped the top Stamp Duty rate for properties valued at $500,000 and under when it made the cut last year.
All properties valued at $250,000 and upwards saw Stamp Duty rates drop from 12 per cent to 10 per cent, and Mr Dupuch said: “I don’t understand why they did that.
“I feel they should have kept the high-end at 12 per cent, and lowered the middle market - properties under $500,000 - to 10 per cent. The poor man buying a lot at $20,000 has seen his Stamp Duty double from 2 per cent to 4 per cent, and the guy that can afford it has seen his rate cut.”
Mr Christie, meanwhile, said the top rate Stamp Duty reduction “definitely helped” boost the Bahamian real estate market, as it lifted “a huge burden” for buyers.