RESIDENTS VS. NON-RESIDENTS
Residents and non-residents are treated the same in Barbados with respect to the ability to purchase property. There are no restrictions on foreign ownership, except that non-resident purchasers who wish to acquire property in their own names require the approval of the Exchange Control Authority of the Central Bank of Barbados to complete the sale.
Many non-residents elect to own Barbados property through an offshore company for the flexibility it can offer on resale on in estate planning. Upon a domestic transfer, there is a property transfer tax of 2.5% and stamp duty of 1% due by the vendor.
There are exchange control regulations in place and foreign currency brought into Barbados must be registered with the Central Bank of Barbados. This process is generally a formality but can be necessary in order to be able to eventually remove the funds from Barbados.
OFF-SHORE HOLDING COMPANIES
The utilization of an offshore company can eliminate the payment of both property transfer tax and stamp duty as well as the requirement to register foreign currency if resale of the property is by way of share transfer. Purchasers of property owned in a domestic capacity may therefore want to consider an offshore ownership structure. It is recommended that proper tax consultation be sought to confirm the benefits of an offshore structure taking into consideration the purchaser’s tax domicile and to address ownership of the offshore entity. Depending on the jurisdiction of the offshore holding company, the complete set up costs are in the US$5,000.00 range. The British Virgin Islands, St. Lucia, and St. Vincent and the Grenadines are popular offshore jurisdictions for offshore ownership of Barbados property though other jurisdictions are utilized. Under Barbados law, an offshore company owning property in Barbados must register as an external company with the Barbados Corporate Affairs and Intellectual Property Office. In each offshore jurisdiction in addition to Barbados there are annual filings due to keep the company in good standing. Combined the annual costs total approximately USD$1,800.00.
The most popular justifications for the use of an offshore holding company are the circumvention of the payment of property transfer taxes and stamp duty as well as Barbados exchange control regulations which allows for future sales of the property to be in United States dollars or other currencies. It is important to weigh these factors against the set up and annual costs of the structure.
MORTGAGES
Local Mortgage Repayment Time - Up to 30 Years or until the borrower reaches 65 years of age.
Non-National mortgage Down Payment - Usually between 30 to 50%
Non-National Mortgage Repayment Time - A maximum of 15 years
Mortgage Commitment Fee and Negotiation Fee - Ranges from 0.5% to 3%.
Life Insurance - Required if you need a mortgage.
Annual Property Insurance - 0.4% for a residence, 0.6% for commercial and 0.9% for hotels.
Other things such as location, value and use of the property can affect these rates.
PURCHASING PROCESS
As to the purchase process itself, once the purchase price is agreed upon, the parties sign a sale and purchase agreement (usually reviewed and approved by legal counsel) and ten percent (10%) of the purchase price is paid and held in trust until completion. The balance of the purchase price is paid over at completion. In the interim, purchaser’s attorney verifies free and clear title to the property and ensures that there are no other impediments to the sale. If the transaction involves an offshore company, purchaser’s counsel conducts a complete corporate search of the offshore entity.
Upon a domestic completion, there will be a conveyance of title to the purchaser which is evidenced by the recording of title deeds at the Barbados Land Registry. In the case of an offshore company, the shares of that company are transferred to the purchaser or purchaser’s designee. Purchasers should note that unless otherwise agreed with the Vendor, the property will be sold, “as-is”. The purchaser or their designated agent should therefore be sure to inspect the Property prior to entering into an agreement for sale as there will ordinarily be no warranty given by the Vendor as to the state, condition, quality or fitness of the Property. A purchaser would therefore be at liberty to have the Property inspected by a civil engineer, plumber, electrician or other professional of their choosing prior to entering into the agreement. Should they so decide, such inspections will be at the purchaser’s full cost unless otherwise agreed. Additionally, purchasers should note that land taxes payable with respect to the property and any common expenses (if applicable) will be for their full account as from the date of completion of the sale and should take this into consideration when budgeting for the purchase.
ADDITIONAL COSTS INCURRED BY THE PURCHASER
There is no Property Transfer Tax for buyers.
Buyers Legal Fees - Approx. 2 – 2.5% of the purchase price (plus 17.5% VAT).
Stamp Duty - Approx. 1% of the purchase price (plus 17.5% VAT).
References:
Dentons Delany Barbados - CSBrand-13100 Caribbean - Vendor Guidelines of Barbados - Buyers_23 — 03/01/2024
*The above information is deemed reliable, although not guaranteed. Please contact your attorney / loan officer of choice for confirmation on any fees that may be associated with your intended purchase.