The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government has extended the six-month “amnesty” for persons to bring forward unstamped real estate conveyances and pay the outstanding transaction tax by another two weeks.

The Department of Inland Revenue (DIR), via a notice posted on its website, confirmed that the deadline for persons to exploit what the Prime Minister branded “a significant concession” has been extended from the original December 1, 2024, expiration date to December 16.

No explanation was provided for the extension, and both Cabinet ministers and Department of Inland Revenue officials did not respond to Tribune Business calls and messages seeking comment before press time last night.

However, several Bahamian attorneys speaking to this newspaper on condition of anonymity said there had been a “rush” late last week to meet the original cut-off for a six-month ‘amnesty’ designed to incentivise persons with unrecorded conveyances and outstanding taxes to bring those documents forward for stamping and make the necessary payments.

Philip Davis KC, in launching the initiative during the 2024-2025 Budget’s unveiling at end-May, said persons would be permitted to pay tax based on the value of the property when they purchased it and the conveyance was signed. Given that real estate prices have risen since, he added that this would result in them paying less in tax than they would based on today’s value.

While attorneys have told this newspaper that the Government has not waived the fees or penalties for late recording/stamping, they added that it is also not challenging the transaction values on conveyances brought forward under this initiative. As a result, it is not calling for properties to be appraised or deals reviewed.

“They’re going to extend it even though they’ve given enough time,” one attorney said before the new December 16, 2024, deadline was confirmed. “We have several of those, worth a collective $20m, and we cannot get a response from the Department of Inland Revenue.”

Another attorney added that one hold-up had been the Department of Inland Revenue’s position that it would not accept the VAT (formerly Stamp Duty) on conveyances brought forward under this initiative until outstanding real property taxes associated with the same property were also paid.

“A lot of people were rushing last Friday to get things in,” they said, “and there were some issues that came up as far as delays and where the Department of Inland Revenue would not accept VAT on a deed unless real property tax was paid up. If somebody had an issue with real property tax that could cause a delay.

“I think the extension was just to give everybody a chance, especially those who were backed up dealing with these issues, to have that opportunity. It stings a bit for everybody who paid on time. I think the Government is going to see some decent revenue come in from those that were lagging behind.” 

The Prime Minister, in unveiling the Budget, said the ‘amnesty’ was part of a wider package designed to increase the Government’s tax earnings from real estate transactions by encouraging persons to bring forward unstamped, unrecorded conveyances and pay the appropriate levies.

He also warned that buyers were exposed to increased risk if they fail to record their purchases, plus pay the due taxes, because their property titles and ownership are not secured or perfected. “The Government is aware that there are a number of unstamped documents held by persons, which results in these persons not being able to prove land ownership to the Department of Inland Revenue and otherwise,” Mr Davis said

“This is an impediment for development and commerce in this country. So, the Government has made the decision to grant amnesty to allow documents to be stamped at the value of the time in which the transaction took place rather than at the current market value. This regime is temporary and effective immediately with an expiration date of December 1, 2024.

“This is a significant concession,” the Prime Minster added. “At present, all documents are stamped at their current market value regardless of when they were purchased. For example, suppose an individual purchased a property 30 years ago for $25,000 and sold that same property for $50,000, but never stamped the documentation.

“Later on, a new prospective buyer wants to acquire the property through a mortgage. The property now has a small house on it that is worth $150,000. In order to have the property financed, all of the transactions for the last 30 years need to be recorded; that is, to have the VAT paid at the current market value of $150,000 plus penalty.

“Unfortunately, this is all too often a deal breaker, preventing the transaction from moving forward, hurting both the buyer and the seller and acting as a drag on the real estate market.” To highlight the initiative’s importance, Mr Davis again referred to it when he launched the 2024-2025 Budget debate a week later.

“Taxes on real estate, whether Stamp tax or VAT on real estate, have been a prominent part of our tax mix for a very long time. It is a tax without the automatic enforcement mechanisms of modern taxes such as VAT or Business Licences. The purchaser or his/her agent has to willingly present the conveyance for stamping, and recording the sale of the property,” the Prime Minister said.

“If they do not present the conveyance for stamping, that by itself does not invalidate the sale, and recording the property itself does not validate the sale. However, it does create an unnecessary risk for the legitimate purchaser. Because of the lack of financial resources, some purchasers have not paid the tax and, given the passage of time, the property value has increased and, therefore, the tax burden has also increased.

“This is why the six-month period where conveyances for property can be stamped at the original value is such an important concession. It allows purchasers the ability to regularise their purchases.”

Mr Davis then added: “Over the last two years, as a tax authority the Department of Inland Revenue detected some unusual activity in this tax. Unusual in that significant real estate transactions, although announced by realtors, were not immediately followed by the presentation of conveyances for stamping.

“As I said before, the presentation of a conveyance for stamping is by no means automatic or mandatory, and purchasers could delay the presentation of conveyances for a number of reasons. However, for high-end real estate, traditionally these conveyances have been presented without delay.”