The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A prominent Bahamian realtor yesterday voiced misgivings that the Government’s constant pronouncements about cracking down on foreign real property tax delinquents could drive legitimate overseas buyers away.

George Damianos, Damianos Sotheby’s International Realty’s president, emphasised to Tribune Business that every foreign property owner in The Bahamas - as well as Bahamians - must pay all due taxes but expressed concern that the “discriminatory” sounding message may not be well received outside this nation.

The Department of Inland Revenue has frequently warned over the last several months that it plans to exercise its “power of sale” to seize, then sell-off, real estate owned by chronic real property tax delinquents who have made no effort to pay for years. However, this effort will only be applied to foreign-owned and commercial properties as the Real Property Tax Act prevents the tax authorities applying these powers to Bahamian-owned owner-occupied residences.

“I don’t know if I want to say this, but it’s on the tip of my tongue,” Mr Damianos told this newspaper. “I’m a bit disconcerted when the Government pronounces it will be foreclosing, or dealing with by power of sale, only property owned by foreigners. Granted, foreigners should pay their property taxes, as they pay them in their own country, but I don’t know if we should be vocalising discrimination treatment between Bahamians and foreigners.

“It doesn’t resonate very well with equality in the rest of the world. It’s on my mind that if we say too many things like that foreigners could get the signal they are not welcome in The Bahamas or being identified or singled out. We don’t want them to feel that way, but they should pay their property taxes. Every dollar we beat the Government out of we have to make it up.”

Michael Halkitis, minster of economic affairs, said earlier this year that the Government is only targeting “really chronic” property tax delinquents among foreign and commercial owners who are said to owe a combined $461m to the Public Treasury. The Government is “targeting extreme cases” who have totally disregarded their tax obligations for up to 10-20 years with its warning that it will start to seize and sell-off their properties to recover all arrears owed.

The minister also reiterated that Bahamian owner-occupied properties, where owners live in their own residences, are protected by law from the Government exercising its ‘power of sale’ over their real estate. They are not being targeted in an initiative which seeks to “put a dent” in the total $822.168m outstanding real property that is believed to be past due and owing to the Public Treasury.

Mr Halkitis, stating that the latter figure was the total arrears as at May 18, 2023, added that of this sum some $226m is owed by foreign property owners. A further $235m is due from commercial properties housing businesses or being used as rentals, and thus generating income. Some $155m is owned by Bahamian homeowners living in owner-occupied properties.

Based on these figures, foreign tax delinquents are responsible for 27.5 percent of total real property tax arrears, and commercial properties another 28.6 percent. Together, they account for a combined 56.1 percent or slightly more than half of the total real property tax arrears, and it is this that the Government is targeting with the ‘power of sale’.

Mr Damianos, meanwhile, yesterday revealed that while real estate sales activity was not as robust for his firm this year compared to 2022 it was still ahead of pre-COVID performance from 2019. “It’s still holding. It’s not as strong as it was last year, but it’s holding,” he told Tribune Business. “Right now we’re in a bit of a shoulder period as people go back to school and vacation in August and September.

“We are off from last year, but it’s held up touch wood. The interest and momentum is still good. I would say that we are definitely ahead of where we were in the comparable year of 2019 pre-COVID. We’re OK, thank God.” Mr Damianos said inventory shortages in the high-end market, due to many properties being sold in the post-COVID boom, had slowed the pace of activity slightly while there were also a number of listings “that seem to be over-priced”.

Noting that the market will eventually correct both these trends, he added that he remains optimistic about industry prospects for the remainder of 2023 and into 2024 despite the ongoing murmurings about a possible US recession. “I don’t see any real signals that will change that outlook for The Bahamas right now unless something drastic happens,” Mr Damianos told this newspaper. “If we can keep it together and keep our policies together we’ll be OK.”

John Christie, HG Christie’s president and managing broker, added: “It’s still fairly high demand, especially among the higher-end properties. It’s a little quieter in general now but that’s par for the course and there’s still momentum. It’s slowed a little bit but is holding and, if something comes up they’ll want to buy it.”