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High-End Real Estate Market In 'Shock, Panic'

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

THE high-end second home market is in "a state of shock" and "panic" over fears of "exorbitant" real property tax hikes following the recent budget changes, realtors are warning.

John Christie, director and vice-president of HG Christie, told Tribune Business that the government's decision to amend the definition of "owner occupied-property", leading to the removal of the $50,000 real property tax cap and a higher two percent rate, was effectively a "double whammy" for this market segment.

"People are in a state of shock in the luxury high-end market. There is a lot of talk in New York and other places like that. People are afraid they can't sell their homes. In some cases you're talking about going from $50,000 a year in property tax to $200,000 a year in property tax," Mr Christie said.

"There are a lot people upset up about this. There are a lot of people who want to buy and move forward, but are now saying let me wait and see what happens here."

The definition of the term "owner-occupied property" has been changes in the Real Property Tax Act to remove the phrase "or seasonal basis", inserting a requirement that an owner must reside in their property for at least six months annually.

Beginning January 1, 2019, an owner that resides in their property for less than six months in any given year will be required to pay real property taxes annually at the rate of 0.75 percent on that part of the market value which does not exceed $500,000, and two percent on that part of the market value which exceeds $500,000. The maximum annual tax of $50,000, which applies to owner-occupied property, will not apply in such instances.

Christine Wallace-Whitfield, the Bahamas Real Estate Association's (BREA) president, said the organisation was still hoping to have a "sit-down" with government "to hash-out" some of its concerns.

"There are still a lot of concerns that we want to sit down with the Government and hash out," she said. "We are still asking for the sales before July 1 to be honoured at the previous VAT rate. We never got anything in writing on that. I wrote a letter to the Government and never got a reply.

"I had a phone call but we want a discussion. We would like to sit down and speak about our concerns. I think we are very much an important industry in the Bahamas, and we should be able to sit down and have an audience with the Ministry of Finance."

Mrs Wallace Whitfield continued: "Under the new regulations as it appears now, anyone who does not spend six months or more here, the property will be deemed other than residential. If it is deemed other than residential the property tax rate will go to 2 percent and the cap is null and void.

"There is panic in some places with people saying they couldn't have thought this through. Most of these people don't spend six months in one place. With these homes they hire staff to maintain the property in sort of an under-the-radar economy."

Monica Knowles, Bahamas Realty's 2016 'top producer', told Tribune Business there is concern over the possibility of a flood of luxury homes coming on to the market if second home owners decide the cost is too high.

"The fees could be exorbitant for a $5-$10 million home, and the even higher brackets will feel it more. People will decide whether it is something they want to absorb or not. There's a lot of concern in that market," she said.

Comments

proudloudandfnm 1 year, 2 months ago

We need a government that finds ways other than taxing the snot out of everyone and everything to raise revenue. This useless government we have now is going to destroy our economy. They have no answers. All they know is tax tax tax. Commerce will die if they keep this sh-t up...

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Clamshell 1 year, 2 months ago

Yup ... but, hey, look on the bright side: Pretty soon we won’t have to deal with all those annoying foreigners and their grubby money. We can all go back to happily growing tomatoes and selling them to each other for a living!

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Gotoutintime 1 year, 2 months ago

Yep---All the foreigners will be gone and then we'll be happy, right??

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BahamaPundit 1 year, 2 months ago

FNM should look at Real Property Tax in the US and follow their charges. Then foreigners will not be able to call foul. It's not rocket science. For example, these are the states with the highest property tax in the US:

New Jersey: 1.89 percent New Hampshire: 1.86 percent Texas: 1.81 percent Nebraska: 1.76 percent Wisconsin: 1.76 percent Illinois: 1.73 percent Connecticut: 1.63 percent Michigan: 1.62 percent Vermont: 1.59 percent Rhode Island: 1.35 percent

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Clamshell 1 year, 2 months ago

Property taxes in the U.S. are not set by states, they are set by a mix of taxing authorities, including states, counties, cities, school boards, etc. The numbers you are quoting probably are averages. For example, the property tax in rural New York State will be far different than New York City. But any of them will be well below what the Bahamas is proposing. Goodbye, expats ...

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DWW 1 year, 2 months ago

property tax in the US stays within the district it is taxed from and directly pays for schools/education, public transportation, garbage collection road maintenance etc. Here in the Bahamas it goes into the slush fund and government elite pockets. big difference. i don't mind paying taxes if i feel like i'm getting value for money. but i generally feel like i'm being fleeced daily and lawfully too. schools are horrendous, public transportation is laughable, garbage collection is inconsistent, and road maintenance is loquacious at best.

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Proguing 1 year, 2 months ago

How about government collecting unpaid property taxes? Ever thought about that?

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johnmcntsh 1 year, 2 months ago

Although the taxes in in communities in some areas of the US. are high, there are amenities which come with those taxes that the Bahamas cannot provide. For example the taxes in Scarsdale NY. are 2% but the average salary is $249,000.00 and that does not cover the retirees who are living on very generous investments.
The amenities are substantial. Beautiful parks, pools, roads, railroads, beautiful airport, fantastic schools, etc. Taxes are fine as long as there is a return. Views are wonderful but they only go so far. There has to be a plan to upgrade infrastructure, raise standard of living for everyone on the Islands and provide a safer environment.

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Clamshell 1 year, 2 months ago

... I hear they even have electricity and running water! Imagine!

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Gotoutintime 1 year, 2 months ago

Clamshell---And they can send and receive mail!!

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DWW 1 year, 2 months ago

Parks and playgrounds and public pools, ball fields. imagine it. provided to all and sundry instead of only available to the middle and upper class at private spots.

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Bonefishpete 1 year, 2 months ago

Low hanging fruit. Surprised it took them this long.

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Damifiknow 1 year, 2 months ago

Can’t tax yourselves into prosperity!

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Well_mudda_take_sic 1 year, 2 months ago

Foreigners currently holding real property just need to do like most Bahamians have been doing for decades, i.e. stop paying RPT.

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Gotoutintime 1 year, 2 months ago

Mudda has the right idea---Just don't pay the taxes like everyone else and tell Government to stick it!

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