Fast facts:

3rd richest country in the Western Hemisphere

Neither residents nor non-residents are taxed on income.

Capital = Nassau

Population = 323,000

Currency = Dollar

Economic Summary

Is everyone ready with their piña coladas? Does everyone have one of those little umbrellas? A piece of pineapple and maybe a little nutmeg sprinkled on top for full effect? It’s okay? Excellent!!!

Now, take your first sip and think of ‘The Bahamas’…and suddenly you’ll find yourself transported to a turquoise sea teeming with marine life and sandy beaches that stretch for miles. You sit in your beautiful Villa, being served a seafood cocktail with prawns and crayfish, while you feel the sun tan your extremities… So… do you want to go?

Although tourism is an important player in keeping the economy afloat, it is not the only thing that is happening on this island paradise:
Neither residents nor nonresidents pay income tax, capital gains tax, or inheritance tax.

Tenant laws favor landlords and only properties valued at less than B$25,000 are subject to the Rent Control Law.

The economic and political environment is stable and GDP per capita is among the highest in the Caribbean.

Rental yields for seasonal properties exceed 10-12% per season.

As for GDP per capita, there has been an increase since the early 1990s, when GDB growth was a constant 3%.
The only flaw in this steady GDP per capita growth was in the early 1990s, when inflation peaked at just over 6%.
But even high inflation couldn’t keep tourists away, as seen in Tourist Arrivals.

Inflation has been on a steady downward spiral since 1990 and has therefore fueled GDP growth.

Although the economy relies heavily on the US economy to ensure growth, tourist arrivals figures have been stable since the early 1990s.

Real Estate Market Review

So even though the Bahamas is heavily dependent on the US economy to ensure its growth, the real estate market is still very much in favor of investors….

This is why:

Restriction of foreigners to buy properties?

There are no restrictions for foreigners buying properties:

The only exception is a Government permit prior to the transaction, if the property is undeveloped land and is larger than five acres.

Are rental yields constant?

Yields hover between 5% and 6% for properties located in coastal areas of Nassau and other islands.

Rental yields are good in gated communities because there are many expat accountants and lawyers.
Properties with seasonal rates have returns of 12% to 15%, as the Grand Bahamas is so close to the US that many commute.

Is Bahamas Law Pro-Landlord or Pro-Tenant?

The Bahamas Landlord and Tenant Law is Pro-Landlord:

Rentals can be freely agreed for short-term and long-term leases.

The landlord must give the tenant adequate notice of the rent due and possible eviction for nonpayment of rent.

If the tenant does not pay the rent on time, the landlord can call the local police and repossess the property.

Although a court order is not needed to evict a tenant, most landlords take delinquent tenants to court and sue them for uncollected rent.

How much tax will I pay on my property?

Neither residents nor nonresidents pay income tax, capital gains tax, or inheritance tax.

The maximum property tax is 2% for properties worth more than US$500,000 (GBP: 250,000, ZAR: R3,500,000)
As an investor, the only ‘restriction’ the Bahamas poses is the purchase costs involved in the purchase process:

Registration Fees: The buyer must pay various fees for the property to be registered. These fees are minimal and are not expected to exceed 0.5% of the value of the property.

Tax on Documented Legal Acts: The Tax on Documented Legal Acts must be paid at the time of delivery of the property. The stamp duty is usually split between the buyer and the seller.

Up to 20,000

two%

20,000.01 – 50,000

4%

50,000.01 – 100,000

6%

100,000.01 – 250,000

8%

More than 250,000

10%

Legal Fees: Each party pays for their own attorney. Legal fees are determined according to the value of the property:

First 500,000

2.5%

Next 500,000

2.0%

Next 4,000,000

1.0%

More than 5,000,000

0.5%

Real Estate Agent Fees: Real estate agent fees are set by the Bahamas Real Estate Association.

Fees are determined as follows:

Vacant/undeveloped land on all islands except Grand Bahama

10%

Improved residential properties in the Outer Islands

8%

All property types in Grand Bahama

fifteen%

Improved residential properties (homes, condominiums) on all other islands, including New Providence (location of Nassau) 6%

conclusion

At a glance, you could see the Bahamas as an unattainable paradise, only reserved for the rich and powerful. Exclusively frequented by celebrities to escape the limelight and for us mere mortals to just watch and wait…….

But in fact, the Bahamas is a place that has all the elements that make investors cross-eyed: no income taxes, pro-landlord laws, and good rental yields 🙂