Guide to buying property in Barbados
Guide to buying property in Barbados
Residents and non-residents are treated the same in Barbados regarding the purchase of property. There are no restrictions on foreign ownership.
Here is a short guide to buying property in Barbados.
The two primary methods in which Barbados property is purchased are: (1) by domestic conveyance of the property itself; or (2) transfer of shares of an offshore company owning the Barbados property.
For the reasons stated below many non-residents choose to own Barbados property through an offshore company.
Upon a domestic transfer of a property there is property transfer tax of 2.5% and stamp duty of 1% payable by the seller.
There are exchange control regulations in place in Barbados. This means that foreign currency brought into Barbados must be registered with the Central Bank of Barbados. Whilst this process is generally a formality it is absolutely necessary. This registration will enable the buyer, on a sale, to remove the funds from Barbados.
The use of an offshore company eliminates the payment of both property transfer tax and stamp duty. It also avoids the need to register foreign currency.
Ownership through an offshore company can also offer some flexibility. Purchasers of property owned in a personal capacity may wish to consider an offshore ownership structure. Proper tax consultation should be sought to confirm the benefits of an offshore structure. The purchaser’s tax domicile will need to be considered and to address ownership of the offshore entity.
Depending on the jurisdiction of the offshore holding company, the complete set up costs are in the reange of US$5,000. The British Virgin Islands and St. Vincent and the Grenadines are popular offshore jurisdictions for offshore ownership of Barbados property (although other offshore jurisdictions are also used).
Under Barbados law, an offshore company owning property in Barbados must register as an external company with the Barbados Corporate Affairs and Intellectual Property Office.
Annual filings must be made in the offshore jurisdiction for the relevant company and in Barbados in order to keep the company in good standing. The combined annual costs of these filings are currently in the region of US$1,600.00.
As to the purchase process itself, once the purchase price is agreed, the parties sign a sale and purchase agreement. This is usually agreed between lawyers for each party. At time of exchange of contracts the buyer pays a deposit equal to ten percent (10%) of the purchase price. This is usually held by the lawyers in trust until completion. The balance of the purchase price is paid at completion.
In the period between exchange and completion the buyer's lawyers will check that there is free and clear title to the property. They will also check that there are no other impediments to the sale.
If the transaction involves an offshore company, the lawyers will do a complete corporate search of the offshore entity.
In the case of an offshore company, the shares of that company are transferred to the purchaser or the purchaser’s designee.
If a property is owned in an individual's name, there will be a conveyance of title to the buyer. This is evidenced by the recording of title deeds at the Barbados Land Registry.
The most popular reasons for using an offshore holding company are the avoidance of the payment of property transfer taxes and stamp duty. In addition, Barbados exchange control regulations will not apply so future sales of the property may be in United States dollars or other currencies. It is important to weigh these factors against the set up and annual costs of the structure.
We can recommend lawyers who will guide you through the process.
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