The Chairman of the Lyford Cay Property Owners Association, Henry Cabot-Lodge III says,  “investor confidence in the Bahamas is  undermined by the insensitive and irrational changes in the tax laws and policy of the government.”

In a  letter to Deputy Prime Minister and Minister of Finance Peter Turnquest,  Mr. Cabot-Lodge  is “appealing to the government to quickly clarify the intent of the Real Property Tax amendments   and to recognize that the winter resident market is an economic asset to the Bahamas that should be incentivized and not discouraged by punitive taxation.”

He said,”the 2018 amendments to the Tax Act — Real Property Tax Rates and lack of clarification concerning the implications of the definition of “owner occupied” has generated substantial dismay, confusion, and much expression of concern within our community.”

Writing on behalf of the Association, Mr. Cabot-Lodge said ,”we fully understand and recognize the need for the Government to generate revenues from all possible sources including the real property tax.

The principle source of this concern is the following excerpted from the new law as eXplained by Bahamian legal counsel:

Owner-Occupied Property

“The definition of the term “owner-occupied property” has been amended to remove the phrase “or

seasonal basis” and to insert a requirement that an owner must reside in their property for at least

six months annually. The new definition of the term is now: “property occupied by a person who

being the owner in fee simple or a mortgagor in possession occupies and resides in such

property exclusively as a dwelling house on a permanent basis that is six months or longer”.

As a result of this change, beginning 1“ January 2019, an owner that resides in their property for

less than six months in any given year will be required to pay real property taxes annually at the

rate of 0. 75% on that part of the market value which does not exceed $500,000.00 and 2% on

that part of the market value which exceeds $500,000-00.”

He said,”this change will affect Bahamian citizens, permanent residents and second home owners who do

not reside in their property for a minimum of 6 months. Accordingly, the statutory maximum

annual tax of $50, 000. 00 which applies to owner-occupied property, will not apply in such

instances.

We have many expat property owners living in our community who occupy their homes in the

winter months and who do not reside here in the Bahamas for six full months annually. These

owners retain their residences for their exclusive use as winter homes and employ their

Bahamian staff and their Bahamian support service personnel on a year-round basis. If we

understand this change in the law correctly, their real property tax rate is being doubled, from i%

to 2%, and further they will no longer be eligible for the $50,000 annual cap on their real property

tax.”

The Chairman said, “in many cases this arbitrary change will result in a 500% or greater increase in their real property

tax burden. For many residents in our community, this will impose annual real property tax bills of

many hundreds of thousands of dollars.

if the tax burden becomes too high and unpredictable, a group of homeowners have already

indicated to me that they will sell and leave the Bahamas. This would lead to unintentional

circumstances that would adversely impact property values and every sector of the economy that

services Lyford Cay as weii as similar communities. It would heavily reduce: household and

general employment; construction; landscape maintenance services; pool services; electrical and

plumbing services; food services: automobiles purchased: utilities payments— electric, telephone,

water and cable; legal fees and real estate commissions; property tax revenue; and, VAT

revenue.

”Further negative impacts would include: the reduction of property values, the collection of

revenues for community maintenance, and bring to a halt a number of planned property sales and

construction projects that are presently being placed on hold because of this tax uncertainty.

Such adverse impacts would not be unique to Lyford Cay, but they would also be felt throughout

the many thriving second-home communities throughout the Commonwealth.

”We do not understand the reasoning behind what appears to be the punitive treatment of expat

winter residents, whose properties are used in a manner identical with those of full year expat and

local residents. Whatever the reason, we are greatly concerned that if this interpretation of the

law stands, we will have wholesale liquidation of what in many cases are multi—generational,

resident’s properties here. The impact on our community will be devastating.

”It is important for policymakers to understand the economic benefits provided by winter vacation—

home residential communities that have demonstrated a consistently stable source of economic

activity in the Bahamas. In the case of Lyford Cay, that has been over sixty years of consistent

and solid community development and growth contributing approximately $215,000,000 million

per annum to the GDP of Bahamian economy. We are concerned that absent our many “winter”

residents, the viability and sustainabiiity of our community is at risk,” he said

Mr. Cabot-Lodge said, “the  rumors of these unwelcoming tax policies now swirling around New York, Florida, Toronto,

and other North American and Latin communities will have unintended long—term consequences

for the Bahamas as investor confidence is undermined by insensitive and irrational changes in tax

laws and policy. As I am sure your government fully understands, there is a large “snowbird”

population who own homes here, as in all Caribbean warmer climes, and this change in the law,

we hope unintentionally, suggests that such residents, eagerly sought elsewhere, are now

unwelcome in the Bahamas,” he said.