Bermudians tend to fixate to the point of obsession about owning property. Given the historic rate off appreciation and the fact that for many years onshore capital market investments (in hard currencies) were limited or just not available, it is no wonder that real Bermuda property became the investment of choice.

As with any investment, there is potential and pitfalls. Concentrate all of your cash in property (or street mortgages on same) and you may experience a liquidity crunch. That is vernacular for lots of wealth on paper and precious little in your pocket; especially when you own a large old run-down property that could conceivably in the future fetch those great rents, but needs about the price of a small new cottage just to bring it up to prime rentable condition. This is also known as the Liquidity Catch 22.

You?d be in clover if you could rent it, but you will need to mortgage your soul in order to do so, with most or all of the revenue going to cover the credit risk.

The real distribution will come way down the road when you are ready to retire; the mortgage is paid off; and you need a fixed income stream.

Hopefully, at that point, that very same piece of real estate will not need another major revamp to attract the kind of rent that you need to now maintain your lifestyle. Does this sound cynical? It doesn?t mean to be, just realistic. Every investment has to be examined from all sides. In financial circles, this is quantified as the ROI question, but not referring to the king in French.

ROI stands for real return on investment ? adding up every single property cost expensed against the return revenue to your pocket: mortgage interest, condominium fees, legal fees, renovations, maintenance and repairs, insurance, your time, commissions, land taxes, assessments, and the conveyance costs to beneficiaries.

Until the Stamp Duties Amendment Act of 2005, almost every Bermuda property at one time or another faced a stamp tax on the estate. Families wanted to protect homes for future generations by portioning out inheritances appropriately according to their wishes. Generally, this meant conveying an interest in the property while the owner is alive, either for life, or outright and paying the assessed stamp duty on the current market value of the real estate. While, conveying during life was less of a financial stamp tax burden than at death, for some families, the cost was still punitive and unaffordable.

Regrettably, more often than seems fair, some families faced the matriarch?s (ladies live longer) last day of reckoning knowing that they could not equitably solve this stamp tax burden and may have reluctantly had to acquiesce into a forced sale of the property to satisfy the Government Tax Man.

Realising that this prohibitive tax was negating social policies aimed at helping Bermudians to obtain and keep affordable housing, the Stamp Duties Amendment Act of 2005 was passed, effective April 1, 2005. There continues to be increased interest in applying for the Primary Family Homestead Certificate. And why not, since it is a wonderful way to protect a family property at passing from estate Stamp Duty, a tax that in the past was onerous and financially devastating to some families.

Filing the application is an easy and inexpensive exercise: one simple form, several items of identification with additional information obtainable at the Tax Commissioners office.

All individuals with Bermudian status who own or otherwise have a legal interest in residential property situated in Bermuda may apply. You must fill out the application and send it along with; proof of ownership of the property (a copy of the deed must be certified); provide a Government issued photo identification, such as a driver?s license, voter?s card, or senior card; and provide a copy of your Bermuda passport with a status stamp or Certificate of Bermudian status.

But, as with any decision and this is a financial decision more than it is a legal decision, there are many questions and family issues that are intertwined with the application for this certificate.

What kind of property is eligible?

It says residential - are apartments residential or commercial

Proof of identity cannot be found, what to do?

Can I change my mind?

Should I do this if I will automatically get the marital deduction, as a spouse?

Multiple children - how are we going to distribute the shares of the property now?

Multiple families owning the same property, one owning the land, others owning the real estate

Determination of market value is not a problem but proof of ownership is.

What happens if we file and then divorce?

I am Bermudian status married to a PRC. Can I take the whole value of the property?

Life interest, how is this handled?

Joint tenancy

Tenants in common

Freehold versus leasehold ? we live in a condo, what to do?

I don?t have a will ? how can I be sure the property is passed to the right beneficiaries?

Trusts ? if the property is already in a trust, is it too late?

Can a Power of attorney apply for this?

Title of property is unclear or cannot be determined, or deed is missing - can this be resolved.

Elderly relatives are not of sound mind to apply, no power of attorney exists - dementia and Alzheimer?s.

More than one property?

What happens if I die in the middle of the process?

What happens to the rest of taxable Bermuda assets at death?

Prior to the Amendment to the Stamp Act, placing other family members on a deed with elderly parents, for instance, was a method (and still can be) to keep property in the family while paying a discounted present value on the property value during life.

It has been used unethically and tragically on occasion by younger beneficiaries to exert influence and control over older original owners. This need no longer happen.

The initiation of the Primary Family Homestead exemption process will undoubtedly promote vigorous discussions among family members. Next week, we will discuss questions and answers and their relevance to Bermudian family estate planning.

@EDITRULE:Martha Harris Myron CPA CFP? is a dual citizen, Bermudian / US. She specialises in investment advisory services, planning lifestyle transitions, and rewarding retirements for executives and senior career professionals. Confidential email can be directed to The article expresses the opinion of the author alone. Under no circumstances is the content of this article to be taken as specific individual investment advice, nor as a recommendation to buy/ sell any investment product. The Editor of the Royal Gazette has final right of approval over headlines, content, and length/brevity of article.