By YOURI KEMP
Tribune Business Reporter
VAT breaks on real estate sales in Dorian-devastated Abaco and Grand Bahama will be based on a sliding scale that is capped at 50 percent of the total tax due, a senior official said yesterday.
Gaynell Rolle, acting controller at the Department of Inland Revenue, explained: “On the sale of real property, what the Government is trying to encourage is we know that there is a lot of property in the Abacos and in Grand Bahama where persons figure they want to sell the property, don’t want to stay there any longer or there is vacant land where persons may want to now go develop.
“So, on the sale of those properties, depending on the purchase value the Government offers a sliding scale of up to 50 percent on the purchase of those properties. So your tax benefit is that the payment will be less up to a sliding scale of 50 percent.”
Ms Rolle added: “Let me give you an example. A property [worth between] 0 to $100,000, with VAT up to $2,500, that will be discounted up to 50 percent, which is a maximum saving of $1,250.”
The sliding scale will be published when the Government fully determines the Special Economic Recovery Zones Order it will develop to facilitate the post-Dorian recovery in Abaco and Grand Bahama. These zones will come into being on Sunday, December 1, and last until end-June 2020.
Christine Wallace-Whitfield, the Bahamas Real Estate Association’s (BREA) president, said of the proposed VAT breaks: “I guess something is better than nothing. I know the Government is trying to do something and I know it is a very challenging time, and we all have to help out on Abaco and Grand Bahama.
“I guess it does help. I’m thinking more about the foreign sales; we have to think about the foreign direct investment and how that can help those islands to rebuild. I think those islands need more incentives. Like when BREA wanted to help where we got assistance from the Cayman Islands Real Estate Brokers Association, where they were able to give money to agents in Abaco and Grand Bahama that needed assistance towards their licensing fees.”
Responding to concerns that the VAT relief will further incentivise “property vultures” hunting for post-Dorian bargains on Abaco and Grand Bahama, Mrs Wallace-Whitfield said: “The vultures are already there.
“They will always come when they think people or properties are in distress. It’s just the way of the world.
“I think it is up to us to police it properly so that authorities are aware of it, and so these vultures don’t come in and take advantage of what The Bahamas has to offer. We can try to educate them on the importance of consulting a licensed real estate agent before you make a decision on whether to sell or not.”
Mike Lightbourn, president of Coldwell Banker Lightbourn Realty, told Tribune Business in September that while the “Dorian tax breaks” were a “plus” he and other realtors at his firm were also fielding inquiries from “vultures” eager to snap up Abaco real estate at bargain prices following the deadliest storm likely to have ever struck The Bahamas.
“It’s great. It’ll be a big plus,” Mr Lightbourn said of the incentives. “But we need to put some infrastructure in place before people rebuild. That’ll also encourage the vultures even more. We’ve had several vultures looking for real estate bargains and making it very clear they’re interested in any bargains in Abaco or Grand Bahama.”
Mario Carey, founder of Better Homes and Gardens Real Estate (MCR) Bahamas Group, also told Tribune Business he has already fielded inquiries from deal-seekers in Dorian’s wake.
“You are going to get bottom feeders coming into the Abaco market looking for opportunities,” he revealed. “You will have people looking for opportunities in Abaco. People are inquiring whether real estate prices are attractive for land. Can we pick up a deal in Abaco? It’s a funny conversation to have.”