The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

ATTORNEYS and realtors yesterday expressed fears that much of the damage caused by the Government’s property tax over-billing is “irreparable” for Abaco and other Family Islands.

Speaking after a meeting was held at the Prime Minister’s Office to redress the Department of Inland Revenue’s mistake, they warned that many “appalled” investors and second home clients were threatening to “sell-up and get out”. While expressing optimism that the meeting’s outcome would lead to some resolution, Abaco-based professionals involved in the real estate sector warned that “the bad news is out there” concerning the Bahamas and property tax bills that have either doubled or, in some cases, are worth more than the subject property’s value.

Frederik Gottlieb, the attorney and former MP, confirmed to this newspaper that the Government’s proposed resolution involved foreign real estate owners paying bills based on the 2017 valuation assessments for their properties.

Only foreigners pay real property tax in the Family Islands, and Mr Gottlieb said the Minnis administration was also proposing that anyone who had paid an inflated 2018 tax bill could apply the excess as a ‘credit’ to future years. All recent valuation assessments will be reviewed.

Mr Gottlieb said he asked Government officials at the meeting why valuation assessments had not been performed “before we got in this situation” and the excessive 2018 billings issued.

“A lot of the damage is irreparable,” he told Tribune Business. “I’ve had a lot of e-mails and communications from foreign clients who were appalled when they received these tax bills, and they’ve said: ‘I want to sell my property and get out’.

“It’s one thing for them to leave, but what about the damage done by them speaking to their friends and family? The [valuation] review should have been done before these bills went out.”

Foreign real estate owners will be allowed to pay taxes based on their 2017 bills once a dispute is filed over this year’s valuation with the Department of Inland Revenue, but Mr Gottlieb expressed fears that this would “overwhelm” the agency based on the sheer volume of complaints likely to be received.

However, he conceded of yesterday’s meeting: “Certainly, if these assurances that have been given are followed through with, that will augur well. In any event, at least it’s a step in the right direction.”

James Rees, a broker with Abaco Island Properties (Bahamas), was equally pessimistic about the Government’s ability to undo the fall-out from its tax over-billing, adding that the meeting had also failed to deal with long-running problems involving his clients.

He last week revealed how a 91 year-old American’s 20-acre property had been valued at $1.4 million by the Department of Inland Revenue, compared to the $62,000 worth placed upon it by a private appraiser.

“They have not addressed my clients’ issues,” he told Tribune Business. “They are trying to address this major debacle they have got themselves into with the taxation. It’s a pretty broad spectrum affected from what I can gather; it’s all over the islands.”

Mr Rees said he was taking a “wait and see” attitude to the Government’s proposed solution, adding: “I don’t trust them any more. I’ve been working with this long enough. If people pay their bills without complaining, those bills may go into next year.

“It seems as if this situation has struck a nerve with them [Inland Revenue], but the damage they have done is pretty large at this point. There’s a huge outcry, and everywhere the bad news is out there. They’ve been pushed to make a public statement, but I don’t know if they will.

“My suggestion was to roll out everything in this year, go back to 2017 and start afresh. It is what it is. It’s disappointing we’re in this position. As realtors, we had so many complaints coming in and nobody had answers. We do have answers now, and we’re moving in the right direction, but we feel there’s a huge amount of damage in already.”

Bill Albury, an Abaco-based realtor with Damianos Sotheby’s International Realty, told Tribune Business he had asked for a Ministry of Finance public statement “to give the home owners some relief so they don’t panic, and show they are trying to resolve the issue by going back to 2017 billings until this is resolved”.

He added: “This has been done without consultation with the Bahamas Real Estate Association (BREA), everyone is upset, and some second home owners are protesting and saying they are leaving and not coming back, as their property tax bills are worth more than their property’s worth.

“It was quite a contentious meeting. Everyone had a say, and even attorneys in the meeting were livid. It will be interesting to see where we go from here.”

Mr Albury said Gaynell Rolle, the Department of Inland Revenue’s under-secretary for Abaco, “spent a great deal of time defending” the Government’s position, rather than apologise for “putting the cart before the horse” and explain how it derived valuations and tax bills “without rhyme or reason”.

He added that a public statement from the Ministry of Finance would “carry a lot of weight”, and said: “Try to calm the market a bit, as it’s really heated over here and is really destructive to the market.

“I’m hopeful and am going to think positively. Hopefully, today’s meeting was a step in the right direction.”