The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Around 30-40 per cent of applicants for the first-time buyer Stamp Duty exemption on real estate transactions could lose the concession if they fail to respond to the year-end “cut-off” date imposed by the Government.

Adrian White, head of the Bahamas Bar Association’s real estate committee, told Tribune Business that the December 31, 2013, set by the Ministry of Finance meant that “after that date it will no longer be dealing” exemptions granted under the first two versions of the Act.

As a result, first-time home purchasers who had either been granted the exemption, or were appealing their application’s rejection, under the 2002 and 2008 versions, have until year-end to bring the relevant documents forward.

In its public notice, the Ministry of Finance said it had “made a change in its policy relative to the deadline for the acceptance by the Public Treasury of letters of approval” issued under the Stamp (Amendment) Act 2002 and Stamp (Amendment) (No. 2) Act 2008.

The Ministry added: “The public is hereby advised that all persons who are in possession of such letters have until 31 December, 2013, to present them along with the relevant documents to the Public Treasury.”

Mr White, an attorney with the Delaney Partners law firm, estimated that the notice could impact 30-40 per cent of first-time buyer Stamp Duty exemption applicants.

This figure, he explained, comprised both successful applicants under the 2002 and 2008 exemptions who had yet to bring their conveyancing documents forward for Stamping, and those who were appealing their rejection.

“I would say that 30-40 per cent of applicants come into that range, and that notice might be relevant to them,” Mr White told Tribune Business.

“That’s a lot of people, and a lot of money to be collected, or otherwise receive the final approval for the exemption.”

Mr White described the December 31 deadline as “an administrative cut-off date” after which the Public Treasury will no longer accept, or deal with, exemptions outstanding from the first two versions of the Act.

“If you’re not Stamped ‘exempt’ by the Treasury on or before December 31, you will not be considered for the exemption, and as such the Treasury will need Stamp Duty to be paid,” Mr White warned, “which is a harsh reality for persons who thought they were declared exempt.”

Potentially millions of dollars are at stake, both for first-time buyers and the Government, with the former facing the prospect of having to find sums as high as $50,000 if they miss the deadline and ultimately have to pay Stamp Duty.

“It’s to encourage people who have benefited from the full exemption, and in some cases half the exemption, that they need to bring it forward and pay,” Mr White added.

“Persons may have obligations to pay Stamp Duty based on that conveyance that they don’t appreciate, while others may have received the exemption but not acted on it further. The timeframe to complete that process is December 31.

“It’s for a good thing. I just hope everyone recognises it and acts upon it, rather than take too long and lose the exemption.”

Mr White added that some first-time buyers, after receiving the exemption, may have - through themselves or their attorneys - failed to complete the process by having the deeds/conveyancings recorded and Stamped.

The Ministry’s notice appears intended to bring this process up-to-date, as delays also create problems for commercial banks and other lenders in terms of perfecting their security for mortgage loans.

Mr White said that due to the uncertainty over whether first-time buyers of properties valued under $500,000 would receive the exemption, lenders had been requiring purchasers to either pay the Stamp Duty or set the relevant sum aside in escrow.

Acknowledging that the appeals process could “take months”, Mr White said those granted the exemption subsequent to paying Stamp Duty could seek to have it repaid by the Treasury.

This, though, had “proven difficult in the past”, as the Treasury did not “automatically accept it is required to remit when the exemption has been granted”.

The first-time buyer Stamp Duty exemption was introduced in 2002 as a means of enabling more lower and middle class Bahamians to afford ‘their piece of the rock’, and help stimulate the real estate and associated professions.

The exemption was reinstated in the 2013-2014 Budget, albeit with amendments.