NASSAU, BAHAMAS — Prime Minister Philip Davis says that despite improved performance in VAT collection since the rate adjustment in the 2021/2022 fiscal year, his administration believes VAT on real estate transactions is still not being fully captured.
Speaking during his 2025/2026 Budget Communication, Davis noted that VAT receipts have risen by $210.4 million—or 18.5 percent—by the end of FY2023/2024, reflecting the resilience of the VAT system and the underlying strength of the economy. However, he said gaps remain in capturing VAT from real estate transactions, and the government intends to introduce additional measures to close those loopholes.
“To promote equity among the Real Property Tax base, we are better defining ‘owner-occupied’ and removing its seasonality by replacing it with a defined time period for foreign homeowners,” Davis said.
In a statement issued after the Communication, the Office of the Prime Minister (OPM) clarified the government’s proposed amendment to the owner-occupied property exemption.
“The Office of the Prime Minister wishes to clarify the government’s proposed amendment to the owner-occupied property exemption as outlined in the 2025/2026 Budget Communication. Under the existing framework, foreign homeowners could apply for the owner-occupied exemption by submitting an affirmation form confirming that the property is owner-occupied and not rented,” the statement read.
“There is currently no formal requirement regarding the minimum number of days a homeowner has to be resident in The Bahamas to receive the exemption. The proposed amendment introduces a more structured and transparent standard. Once enacted, foreign homeowners will be required to submit a revised annual affirmation, which must now include a declaration of the number of days they were physically resident in The Bahamas during the year.”
According to the OPM, homeowners who reside in The Bahamas for more than 90 days will qualify for a partial exemption on property values up to $300,000, while those residing more than 183 days will qualify for the full exemption, which includes both the residential cap and the $300,000 value-based exemption.
“This measure ensures greater accountability and alignment with international best practices, while continuing to support legitimate owner-occupiers who contribute meaningfully to the Bahamian economy and communities,” the statement continued. “The government remains committed to transparency and effective tax administration. Further guidance will be provided to ensure a smooth transition for affected homeowners.”
David Morley, Morley Realty’s principal told Eyewitness News: “From what it sounds like, the government is being fair to better define the requirement period for owner occupancy. Some people may complain but in reality we are talking about the first 300k of the value of their second home and whether or not they qualify for that exemption. My recollection was many years ago this qualification may have been as much as nine months.”
He added: “Certainly if the figures on VAT from sales are correct then keeping it at 10 percent and not increasing it should remain an incentive and the government should continue to benefit from it. Consistency gives investors a better sense of fairness and comfort for investing.”
