Understanding Real Property Tax SavingsMarch 11, 2016
As taxation in The Bahamas continues to become ever more wide-ranging and ever more complex, it has become of increased importance to know your rights and to understand the ways in which the payment of taxes can be minimized. In the context of the payment of real property taxes, an understanding of the changes which came into effect on the 1st January, 2016 through the Real Property Tax (Amendment) Act, 2015 will enable you to ensure that you benefit from the maximum savings that you are entitled to.
Many of the savings provisions in the new legislation are of particular benefit for Bahamian citizens. In particular, citizens who are at least 65 years of age who own Owner-Occupied property are entitled to a 50 per cent reduction in annual tax payable up to $1 million of property value. So, for example, a Bahamian retiree who has an Owner-Occupied property valued at $1 million, will pay annual real property taxes of $3,281.25 compared to a Bahamian who is not a retiree or a non-Bahamian who will pay annual real property taxes of $6,562.50. In respect of property valued at over $1 million, the real property tax rate of 1% will apply to Bahamians and non-Bahamians alike, but the Bahamian retiree owner will retain the benefit of the reduced taxation rate in respect of the first $1 million of value.
Bahamian owners of property that is not owner-occupied, and that comprises not more than four units, which are used solely as a dwelling place and from which no commercial enterprise is conducted, benefit from the introduction of the new classification of Residential Property rate. This new category will include Bahamian owned duplexes and triplexes which are not owner-occupied and will enjoy some of the lowest real property tax rates currently in effect. Given the new rates of $300 on the first $75,000 of value, and 0.625% of value above $75,000, the Bahamian owner of Residential Property will owe less in real property tax on certain properties of higher value than the Bahamian owner of Owner-Occupied Property valued at the same amount. As we have seen an Owner-Occupied Property valued at $1 million which is owned by a Bahamian who is not a retiree will attract real property taxes of $6,562.50 per annum, whilst the amount payable for a Residential Property valued at the same amount will be $6,081.25. An understanding of the differences in rates, and the importance of the proper categorization of property is thus essential to ensure that maximum savings are received.
Additional savings are available for Bahamians and non-Bahamians alike who pay their real property taxes by 31st March in any given year. Payment must be made in full of all taxes and surcharges by the applicable date to enjoy a 10% deduction in the amount of the tax due.