Realtors voice fears on tax ‘inconsistency’

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net

REALTORS yesterday voiced concern over “the optics” and “inconsistency” of tax policy as the Government moves to adjust the VAT paid on real estate sales to ensure foreign buyers pay a 10 percent rate across-the-board.

The VAT (Amendment) Bill 2023, which accompanies the 2023-2024 Budget, contains another previously-undisclosed tweak that is consistent with the Davis administration’s stated policy of placing the burden of increased taxes

• VAT rising to 10% on foreign buys below $1m

• Concern about ‘optics’ of two different tax rates almost entirely on nonBahamians via the likes of raised cruise passenger departure taxes and marina docking levies.

The legislation, which is due to be passed into law after the Budget debate ends and take effect from

July 1, 2023, quietly amends the VAT Act’s Third Schedule to ensure that “every deed of conveyance, assignment or transfer of real property to a foreign person” attracts a 10 percent VAT rate.

Given that all property purchases of $1m or more already attract 10 percent VAT on the acquisition price, only transactions involving foreign buyers for less than this amount will be impacted. The Davis administration, besides targeting a higher VAT rate on real estate purchases by foreigners worth less than $1m, has also hit the same segment with the 25 percent ($30,000) increase in the annual real property tax cap from $120,000 to $150,000.

• Gov’t targeting over $300m from property sales SEE

However, the VAT adjustment, which the Bill’s “objects and reasons” confirms was “inserted to