The Bahamas is a popular destination for tourists and investors, offering an excellent climate, stunning beaches, and tax benefits. Since 2022, over 7 million people have visited the Bahamas, making it a trendy tourist destination.
And with that large number of people visiting the 700 islands that make up the country, finding affordable rental housing can be challenging, making real estate investing in the area highly attractive.
For example, The Commonwealth of the Bahamas has established regulations to make buying an investment property attractive to investors. Interest income earned on loaned capital invested through financial institutions in the Bahamas is exempt from federal or provincial taxes.
This makes the country the ideal location for any global business activity or even retirees looking to diversify their incomes away from the traditionally-taxed markets of home countries.
Even though the popularity of the island country makes investing attractive, there are things to know first.
Before you dive head-first into buying property in the Bahamas, consider that rentals are classified into two categories, short-term (vacation) rentals and long-term (common) rentals.
Advantages include tax benefits, citizenship granted to property owners throughout the area, and the tenancy laws being fairly lax.
In addition to this benefit for investors, anyone looking to purchase real estate in the Bahamas will also find it easy to take advantage of local banks that offer mortgages with some of the most competitively low-interest rates available.
Additionally, foreign owners are exempt from paying stamp duty upon purchase of their property and are offered closing fees that come in at around three percent.
Real estate in the Bahamas falls under two categories of regulations, short-term rentals and common rentals.
The regulations regarding rentals in the Bahamas are relatively simple and have few restrictions or limitations, making the price negotiable between tenant and owner.
The Residential Tenancies Act of 2000 governs tenants’ and landlords’ rights and obligations. Under this act, tenants have the right to a safe, healthy, secure living environment. The landlord must maintain the premises in good repair and give proper notice to raise the rent.
Landlords must also provide tenants with a copy of the written tenancy agreement. The act covers many other aspects of tenancy, such as security deposits, eviction notices, and dispute resolution.
It is essential that landlords understand their rights and obligations under this act to ensure they are compliant and can manage their rental properties successfully.
Short-Term Rentals: Short-term rentals are typically for short durations like holidays or a week or two. Generally, a short-term rental will have a reservation fee of 20-50% tacked on top of the rental price per night for the tenant.
Common Rentals: Common rentals is the term used for longer-term tenants that may sign a lease for 6 months, 1 year, or more. These rentals typically require a security deposit and up-front, first-month rent to secure the lease agreement.
You could choose to purchase and rent a variety of real estate in the Bahamas, including:
- Luxury Bahamas real estate
- Ranch-style houses
Really, when you’re researching the different types of real estate, from condos to luxury Bahamas real estate homes for sale, finding a property that will suit your needs and make you a steady income is entirely up to you and your interests.
For foreign ownership (before citizenship is offered by property ownership), investing in local real estate in the island country is relatively straightforward, with few restrictions for foreign buyers.
There are no taxes or license/permit requirements if you purchase under two acres unless you intend to rent the property or use it for commercial purposes.
In these situations, you must have a permit from the government to buy the property. These and other facts are critical in successfully navigating the markets to find the ideal property.
Additionally, foreigners can enjoy the same rights as Bahamian citizens, including being able to buy beachfront land.
The Bahamas has become an attractive option for foreign investors looking to invest in real estate due to its low taxes and other benefits.
Purchasing property in The Bahamas requires the buyer to obtain title insurance for protection against any potential problems with the title and consider other costs associated with buying, such as transfer taxes, stamp duty, legal fees, and registration fees.
Ultimately, if done correctly, investing in real estate in the Bahamas can be a profitable venture.