How much property tax will I pay on a home in Bermuda?
Every week, Mansion Global poses a tax question to real estate tax lawyers. Here is this week’s question.
Q. I am a US resident considering purchasing a vacation home in Bermuda. What are the property taxes like there?
A. Bermuda is a tax-efficient destination for individuals, charging no income, capital gains or inheritance tax.
However, home buyers pay stamp duty, or transfer tax, when buying property on the island, a British island territory in the North Atlantic Ocean known for its pink sand beaches. . In addition, there is a property tax on residences.
Both levies are progressive, meaning the more valuable the asset, 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 residence, according to the Bermuda government 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 $1.5 million B; and 7% on the amount over BZ$1.5 million.
Property tax is due twice a year and the bill is calculated by the tax commissioner’s office. It is based on a residence’s annual rental value (ARV), or the rent it would charge if offered unfurnished on the open market.
Property tax starts at B$300 for homes with ARV up to B$22,000, according to the government. There are seven additional price bands, starting with a 0.8% charge on B$11,000 above the initial B$22,000 and increasing in B$10,000 increments. The highest bracket is a 50% charge on residences with an ARV over $120,000 B.
Continued: Will empty houses in San Francisco be taxed?
Keep in mind that ARV and market price are not the same.
For example, a 4.65-acre resort outside of 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.
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