25 October 2018 - Events
The process of purchasing property in Barbados is similar to the UK because the island's laws are based on the English system. However, there are important differences.
We are experienced in dealing with Bajan property and the professionals on the island. We have extensive experience of dealing with real estate development and off plan sales, both internationally as well as in the UK and we are aware of the differences between jurisdictions and the concerns of a buyer. We are aware of the various protections that an international buyer is likely to expect to have the benefit of in the current economic climate.
When buying property in Barbados, buyers need to be aware of the taxes and costs involved.
The legal fees for non-contentious matters in Barbados are governed by a statutory scale which prescribes the minimum fees charged. The fees for preparing and completing a conveyance of unregistered land (which will normally be the case) will be as follows:
- Up to Bds$25,000 – Bds$1,000
- On the next Bds$75,000 – 2.5%
- On the next Bds$100,000 – 1.5%
- On the next Bds$300,000 – 1.25%
- Thereafter 1%
Fees for conveyancing of registered land will be one-third of the scale.
There will be additional fees and expenses if the transaction involves borrowing, based on the amount of the borrowing.
The land tax year runs from April to March. Rates vary between nil and 0.75% of the value of the property, depending on the value, with a maximum land tax payable of Bds$60,000. The seller will have prepaid the land taxes before completion and a buyer will be responsible for the months between completion and March of the following year.
Transfer taxes and stamp duty
Transfer taxes and stamp duty are paid by the seller. Stamp duty is charged at a rate of 1% and transfer tax is 2.5% of the gross consideration above Bds$50,000 (the first Bds$150,000 being exempt if a building is included in the sale).
The Exchange Control Regime restricts the export of profits from returns on investments. As the law currently stands, the Central Bank will allow an investor to repatriate the original purchase price and a mark-up of 4-8%. The balance can be repatriated in instalments of US$100,000 per annum. The Central Bank has discretion to approve the repatriation of funds for example for senior citizens or where the money is required for medical expenses.
Non-resident purchasers will often use an offshore company to hold real estate in Barbados in order that transfer tax and stamp duty are not payable on a subsequent sale. This also avoids having to contend with the Exchange Control Regime as the sale price will be collected in the jurisdiction of the offshore company on the sale of the shares in the company.
The BVI is one of the favoured jurisdictions for this purpose. This will mean selling the property to a purchaser who is non-resident and is willing to buy the company which owns the property, as opposed to the property itself. This will not generally be a problem.
There will be additional costs involved in establishing and maintaining an offshore structure. It will also be necessary to register the offshore company in Barbados.
Capital gains are not taxed in Barbados.
Income can be taxable in Barbados in the hands of residents and those who are ordinarily resident. Barbados operates a remittance basis of taxation in a similar way to the UK. While an individual resident or ordinarily resident in Barbados will be liable to Barbadian income tax on a worldwide basis if they are domiciled in Barbados, if they are not domiciled in Barbados, foreign income will only be subject to Barbadian income tax when received in Barbados.
Non-domiciled purchasers can choose how to leave their Barbados real estate in their will. The Succession Act, which applies to Barbadian domiciliaries, prescribes entitlement for spouses and disabled or minor children.