We stumbled across a very useful 'Buying Guide' from Aylesford International on the practicalities of buying property in the Caribbean.
The focus of the piece (to view the original source click here) was, for the most part, the steps non-nationals might have to consider when buying or selling.
Thinking this guide both tremendously useful and timely (given the concerted efforts by certain Caribbean sovereignties to court the attention of those looking to acquire additional citizenship rights) we thought we might overlay some currency and international payments trivia that complements purchases in the region.
The process of buying property in the Caribbean is assuredly quite straightforward; in fact, so the is the process of sending currencies to the Caribbean for such purposes.
Anyone can buy property in Barbados (for example); there are no restrictions, but if you’re a foreign national you need to get the permission of the Central Bank of Barbados. This is a formality.
You do not need a domestic Caribbean bank account prior to the completion of your purchase.
Your vendor pays a property transfer tax and the stamp duty. See below.
Rates of exchange tend to be pegged to the United States dollar, making exchange calculations easy to compare and augment during negotiations.
You can raise finance in Barbados as a non-national. But if you choose to bring the finance with you, it must be registered with the Central Bank.
For legal conveyancing of ‘unregistered’ land (which most is) you pay legal fees on a sliding scale:
Up to BDS $25,000 BDS*: $1,000 On the next BDS $75,000: 2.5% On the next BDS $100,000: 1.5% On the next BDS $300,000: 1.25% Amounts above this threshold: 1%
Further fees will be payable if you’re borrowing for the purchase, based on the loan amount.
You should also budget for an annual land tax. Rates range from 0%-0.75% of the value of the property. The tax has a ceiling of BDS $60,000.
In May 2016 the GBP to BDS (Barbadian Dollar) rate of exchange was 2.90. By November 2018 it was 2.58. This 'strengthening' of BDS mirrors largely the weakening of GBP following the UK's vote to leave the European Union and mirrors, to a larger extent, gains made by the US dollar.
Vendors may elect to price their property (for would-be 'foreign buyers') in USD because the exchange is more easily expressed, however, after your purchase you should expect any land tax, local taxes and ongoing maintenance costs to be prices in BDS.
As a non-national who may be exchanging money and sending it to a bank account in the Caribbean, invariably you can pay USD into at BDS account. Your domestic bank, or the domestic bank of the person or business you are paying, will then exchange into BDS for you. Relying on the receiving bank to perform the exchange could incur additional processing costs, could leave you vulnerable to an unfair margin and may delay the application of funds to the receiving account. Prime Cap is in a position to exchange directly from the currency you hold into BDS or any number of the local Caribbean currencies.
TAX
To avoid certain taxes payable by individuals when selling property, many non-resident purchasers establish an offshore company to buy and own the asset. This also avoids any issues with withdrawing 100% of sales proceeds at once. Prime Cap can just as easily exchange funds for a corporate entity incorporate offshore as we can for an individual. The same margins of improvement are offered by virtue of our consistent commercial rates of exchange.
Furthermore, vendors wishing to keep sale proceeds offshore can make use of our bespoke settlement arrangements to comply with their obligations in this regard.
We must emphasise the fact that, whilst our services can be incorporated into exchanges conducted as part of a tailored tax strategy, Prime Cap Payments Ltd is not regulated to provide legal or tax advice. We can, and happily do, introduce clients to contacts we know, like and trust who are expert in such disciplines.
There are rules on repatriating the proceeds of property sales from Barbados. As things stand, you may withdraw the original purchase price, and a gain of 4-8%. Any further profit can only be taken at the rate $100,000 a year, although the Central Bank may exercise some discretion for senior citizens and emergencies.
To ensure that such additional profit can be realised in the foreign currency of your choice at the same rate as the original purchase sum, we advocate consideration of forward contracts, which enable you to lock in rates of exchange for a prolonger period.
This is particularly useful if you are restricted in the amounts you can withdraw from the territory you've sold in.
There is no capital gains tax for non-nationals.
You may also leave your property to whoever you choose; there are no succession laws for non-nationals.
By adding an authorised person onto your Prime Cap account you enable an approved third party to instruct us to exchange for you. This feature can be particularly useful for private office businesses and trust administrators who handle the exchange and financial affairs of their clients.
For would-be buyers yet to set up their own USD accounts, Prime Cap providers a dedicated service whereby we create and host a USD denominated account for you.
You can either hold funds directly in our segregated clients trust facilities, or ask us to set up and account named to you and to and from which you can make and receive payments...all managed through the Prime Cap online platform.
Each Caribbean sovereignty and each client matter/brief is nuanced and so we invite clients and agents alike to engage with us directly to discuss the particulars, or indeed the generalities, of matters relating to the sale and disposal of residential and commercial real-estate holdings in the Caribbean.
www.primecappayments.com | 0203 172 8193 | brokers@primecappayments.com