Do You Know Your Fees?
Know your fees. They are a couple of fees that you must be aware of when purchasing and selling Barbados real estate.
Selling Barbados Real Estate
Real Estate Agents Fees
The fee associated with the sale of a property is 5% of the agreed selling price of the property. This fee may vary slightly from agent to agent but this is the generally accepted fee charged by members of BEAVA Inc. The fee charged for renting a property is one month's rent on a long term rental.
N.B. The above fees are subject to 17.5% VAT.
The fee charged on a short term rental (holiday rental) is generally 17.5% and is subject to 7.5% VAT.
Due to recent amendments to the Barbados legislation, there is no distinction between National or Non-National vendors. The expenses incurred by a Vendor will be the following:
Property Transfer Tax
Land only - 2.5% of the Purchase Price
House and land - First $125,000 exempt, 2.5% on the excess
Stamp Duty - 1% of the Purchase Price
Land Tax - This amount will vary depending on the value of the property at the time of the transaction
Land Surveyor's fee - Approximately BDS$1,500.00
Real Estate Commission - Normally 5% of the Purchase Price (plus 17.5% VAT)
Out-of-Pocket Expenses - $300 (Approximately)
Purchasing Barbados Real Estate
Guidelines for Purchasing Real Estate
Interested in purchasing a piece of the ‘Gem of the Caribbean Sea’? You are more than welcomed to. They are no restrictions for non-nationals who would like to purchase a vacation home or investment property and no differentiation in expenses between nationals and non-nationals.
Financing is available in Barbados for non-nationals. Several banks provide flexible and convenient mortgages to individuals, local or foreign companies, trusts or other entities. We will be pleased to direct you to experienced consultants for professional advice and guidance.
N.B. All financial arrangements such as mortgage, purchase price and deposit should be in place prior to entering a binding agreement.
Purchasers must obtain the services of a registered local attorney who will have to search the register and establish title to the property prior to the completion of sale.Property passes by conveyance of title, evidenced by the recording of the deeds and certified survey plans at the registry of title.
Purchaser's legal fees for property transfer are legislated in the range of 1% to 2.5%. VAT of 17.5% is payable on legal fees:
Up to $25,000 $750
On the next $75,000 2.5%
On the next $100,000 1.5%
On the next $300,000 1.25%
N.B. Both buyer and seller are responsible for their own attorney fees.
As a formality, funds brought into the island should be registered with the Central Bank Exchange Control Division; instruct your attorney or banker to do so. This ensures that your funds are protected as a foreign investor which facilitates repatriation of these funds should you sell in the future.
N.B. Exchange Control Division’s permission is necessary for the purchase itself, which is usually readily obtainable once the purchase monies have been registered.
A deposit of 10% of the property sale price is required on signing the sale agreement. The remaining balance of the sale price must be paid to the seller's attorney on the transfer of deeds. This deposit is a binding contract which the seller's attorney holds. The period between payment of deposit and completion is likely to be at least 3 months.
Property Transfer Tax
Buyers do not have to pay Property Transfer Tax for existing buildings. The vendor however must pay 2.5% of the purchase price.
N.B. Property Transfer Tax of approximately 10% is however payable by the buyer for land purchases.
The expenses incurred by a Purchaser will be:
Property Transfer Tax - Nil
Proportionate part of land tax - This amount will vary depending on the value of the property and the time of the transaction.
Out-of-Pocket Expenses - BDS$300 (Approximately)
It is necessary for a Non-National purchaser to remit the purchase price to Barbados in foreign currency, after which it will be converted into Barbados currency.
An annual Property Tax is charged on the property based on an assessment of the improved value, or on the site value if undeveloped.Valuations are made by the Government and are reviewed every three (3) years. These taxes are rated as:
Improved Property (House & Land)
0% - Up to BBD $125,000 (USD $62,500)
0.1% - On the excess improvement value BBD $125,001 (USD $62,500.50) not exceeding BBD $350,000 (USD $175,000)
0.65% - On the excess improvement value BBD $350,001 (USD $175,000.50) not exceeding BBD $850,000 (USD $425,000)
0.75% - On the excess improvement value BBD $850,001 (USD $425,000.50) and over
0.60% on unimproved value of the land
Improved Property (Commercial)
0.65% on every parcel of land which is not a residence