Q. I’m a U.S. resident thinking of buying a vacation home in Bermuda. What are the property taxes like there?
A. Bermuda is a tax-friendly destination for individuals, not charging income, capital gains or inheritance taxes.
However, home buyers pay a stamp duty, or transfer tax, when buying a property on the island, a British island territory located in the North Atlantic Ocean and known for pink-sand beaches. In addition, there is a land tax on residences.
Both levies are progressive, meaning the more valuable the property, the higher the tax rate.
There are five rate bands for stamp duty, starting at 2% of the first B$100,000 (US$100,000) of the residence, according to the Government of Bermuda website. Buyers pay 3% on the next B$400,000, up to B$500,000; 4% on the cost between B$501,000 and B$1 million; 6% on the amount up to B$1.5 million; and 7% on the amount over B$1.5 million.
Land tax is due twice a year, and the bill is calculated by the Office of the Tax Commissioner. It is based on the annual rental value of a residence (ARV), or how much rent it would demand if offered unfurnished on the open market.
The Land tax starts at B$300 for homes with an ARV of up to B$22,000, according to the government. There are seven additional rate bands, starting with a 0.8% charge on the B$11,000 above the initial B$22,000 and rising in B$10,000 increments. The highest band is a 50% charge on residences with an ARV of more than B$120,000.
Keep in mind that the ARV and the market price are not the same.
For example, a 4.65-acre compound outside Bermuda’s prestigious Tucker’s Town is currently being marketed for B$15 million, according to the listing with Rego Sotheby’s International Realty.
The same property has an ARV of B$246,000, according to Bermuda’s Department of Land Valuation.
Article Source: Mansion Global
