The government has clarified its policy on tax breaks for first-time home buyers, a move that's being welcomed by the Bahamas Real Estate Association (BREA), which called concerns over the policy a top issue in the real estate industry.
Now that the policy has been made public, BREA President Franon Wilson believes it puts the buyers, along with those in the real estate and banking sectors, in a position to conduct business more effectively and efficiently.
"There is no question that this helps everyone," said Wilson. "People will be able to confirm beforehand if they are eligible for the stamp duty exemption. What ended up happening in the past is that people would go to the bank and be approved (for financing), but only at that point would they learn whether or not they were approved for the stamp duty exemption," he told Guardian Business.
"As a result, they would have to start that whole process again or maybe even cancel the process because they wouldn't be able to afford the down payment, closing costs and the stamp duty amount.
"This would also help to strengthen our banking sector. Right now, a challenge that the banks have is that after someone gets their mortgage, that mortgage cannot actually be stamped and recorded until the person has dealt with the stamp duty exemption.
"Now banks will be able to record a lot faster by ensuring that the collateral they agreed to will be in place, closing the loopholes for people that may be tempted to close that door."
Wilson said the policy also speaks to the government's confidence in BREA to assist in determining the value of homes and comes about after several meetings between that organization and the Ministry of Finance, specifically Minister of State for Finance Michael Halkitis.
According to a notice issued by the Ministry of Finance's Treasury Department that was published in The Nassau Guardian this week: "Licensed financial institutions wishing to determine whether or not their clients are eligible for stamp duty exemption as first-time homeowners can now apply to the Stamp Exemption Union, Treasury Department, Public Treasury Building, East Street North during normal working hours."
"Net purchases would only be allowed on homes in cases where the appraised value of the home and the property does not exceed $200,000. However, in cases where the appraised value of the home and the property exceeds $200,000 and falls below $250,000, full stamp duty exemption would be granted on the first $200,000 and one half on the difference. Such requests must be accompanied by a certified bank copy of the sales agreement.
"In cases where the total appraised value of the home and property exceeds $200,000, stamp duty exemption would only be granted on the purchaser's portion."
Initially introduced in 2003, the policy has undergone several changes since that time. It was introduced to spur greater home buying capacity among the lower and middle income population.
The threshold for the exemption was first set at $250,000 or below, with this later increased to purchases valued at $500,000 or less.

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