The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Extending the first-time buyer Stamp Duty exemption beyond its current June 30, 2013 expiration date would be “absolutely huge”, the Bahamas Real Estate Association’s (BREA) president telling Tribune Business these purchasers accounted for “90 per cent-plus” of his company’s business.

Pointing out that it tackled the “biggest challenge” to Bahamian home ownership, namely the high transaction and closing costs, Franon Wilson told Tribune Business: “That exemption is absolutely huge.

“The fact is that the Government, for decades now, has sought to try and find creative ways to help people own their own home. I see it on a daily basis, the challenge people have in meeting down payments and closing costs.”

Mr Wilson said that for Arawak Homes, first-time buyers were “90 per cent-plus” of its client base, meaning that the exemption was especially valuable for the real estate developer.

Stamp Tax on real estate transactions is often split 50/50 between the buyer and seller, and on a $500,000 property - the upper limit at which the exemption can be obtained - the potential saving for first-timers is $25,000.

Stamp Tax is usually the largest single cost incurred in closing real estate deals, and Mr Wilson told Tribune Business: “If persons get that back through the exemption, it can be the difference between whether they buy today or wait and see what they have to pay in duty.”

Meanwhile, Tribune Business has been contacted by several first-time buyers who were turned down for the Stamp Duty exemption because the combined value of their conveyance and mortgage exceeds $500,000.

This newspaper first highlighted the issue, and one buyer in this predicament said: “My husband and I are currently fighting for our exemption, which we have been told we do not qualify for because our conveyance and mortgage combined exceed $500,000.

“I hope that the articles will continue to raise awareness and put pressure on the government to be fair.”

Another added: “My husband and I bought a house in 2011. We filed for our first-time homeowner exemption in October 2011, and were told in May 2012 that we did not qualify because the cost of our house combined with the value of our mortgage came to more than $500,000.

“We were shocked and assumed this was a mistake,e but after months of back and forth, the Treasury is still insisting that we have to pay and that the combined total of the conveyance and the mortgage must come below $500,000 in order to qualify.

“We would not have bought this house had we known this. It seems that a change took place months after we bought and filed for our exemption. Furthermore, this change was made without any notice being given to real estate agents, real estate lawyers and the general public.

“How is it fair that someone that has the cash to buy a $450,000 house without a mortgage will be exempt from the Stamp Tax, while someone that is not as ‘well off’ and buys a $275,000 house with a $250,000 mortgage is NOT exempt (as $275,000 and $250,00 equals $525,000)? We thought the purpose of the exemption was to help those who did not have that much cash in the bank. This is unfair.”