What price paradise?
With the America’s Cup starting this week, we will have a lot of international visitors. Some of them are likely to be enquiring about buying real estate here, what should I tell them?
Indeed once our visitors see our turquoise waters, pink sand and beautiful weather, the next question they ask is what would it cost to buy a property here?
International buyers benefit when an experienced agent guides them through the often complex rules determining buying property in Bermuda.
The main thing to remember is that there are two categories of residential real estate in Bermuda: real estate that is available only to Bermudians and real estate that also is available to international buyers. From here, the distinction gets more complicated. The following summary of additional requirements gives you an idea of how helpful it can be to have a knowledgeable real estate professional help navigate the process:
• To be eligible for purchase by an international buyer, a property’s annual rental value must exceed a designated amount ($25,800 for a condominium; $126,000 for a house). This usually equates to starting prices of around $3.5 million for a house and $500,000 for a condominium.
• International buyers may also buy property in any development designated under the Bermuda Immigration and Protection Amendment (no. 2) Act 2010 as a tourist accommodation or hotel residence.
• Once a property has been selected, prospective international buyers must submit an application to buy along with an application to reside in Bermuda, with a consideration fee to government. This is done through a lawyer. The timeframe surrounding this can be lengthy, it is wise to allow about six months.
• On top of this there is the cost of a licence to acquire. This varies depending on the type of property you wish to purchase. Fees are set at six per cent of the purchase price of a condominium and eight per cent of the purchase price of a house.
• Agreement in principle between an international buyer and seller includes a deposit of 10 per cent of the purchase price. The deposit is held in escrow, subject to contract, and deducted from the overall purchase price.
• For the most part, international buyers may not buy investment property unless it is part of a hotel complex where a lease back to the hotel can be arranged. However, international owners may be granted permission to rent their private residence by the Immigration Department. If this is the case, permission rarely extends to periods of more than a year and includes a tax of 7.25 per cent on the rental income.
So if you happen to get asked this question over the next few weeks (and you probably will) tell our visitors that there are lots of options to buy in Bermuda, and direct them towards an experienced and helpful real estate agent, who can further assist them with their questions.
•Heather Chilvers is among Coldwell Banker Bermuda Realty’s leading sales representatives. She has been working in real estate for 27 years. If you have a question for Heather, please contact her at firstname.lastname@example.org or 332-1793. All questions will be treated in confidence. Read this article on Facebook: Ask Heather Real Estate