Checklist for Purchasing Your First Investment Home in Bermuda
If you have saved enough money to buy a second home, why not buy a property that earns as much income as it is beautiful? Bermuda, in the Caribbean, has emerged as one of the most popular destinations for foreign nationals when buying a second home. Its natural beauty, location, sophisticated business community and warm climate lures people from around the world to make Bermuda their primary choice.
In fact, buying a property in Bermuda has been so in demand that the government had to put restrictions in place to limit the number of foreigners owning properties in the island-paradise. The perfect place to invest your hard earned money.
As an international investor, you have the option to:
- Buy a freehold house or estate that has a minimum ARV of $126000.
- Buy a condominium with a minimum ARV of $25800
Every property in Bermuda is assigned an annual rental value for the purpose of tax collection. So aside from the purchase, you also need to put into account the fees incurred every year. Though it all may seem overwhelming, it’s a small price to pay, when you have the option to earn and enjoy a home in this paradise. Permanent residents of Bermuda, are entitled to perks such as:
- Buying any condominium not sponsored by the government
- Buying any freehold property
Here are two things to prepare if you are thinking of buying a vacation home in Bermuda.
1. Get the license to be able to purchase a property in Bermuda
As a foreign national, you are required to obtain a license from the Bermuda Government Ministry of Labour & Home Affairs before being eligible to buy a property in Bermuda. You need to apply in a prescribed form through a law firm in Bermuda to get this license. This can take anywhere from 2-9 months for the approval to come from the relevant Department of Immigration.
2. License fee for various properties and applicants
You need to provide the reference of a local, as well as a Bermudian, bank to get this license. The license fee in itself is $1546 USD*, that you have to pay in advance. For permanent resident status holders, the license fee is 4% of the value of the property. For international investors however, the fee for this license, as of the 31st of March 2017, will be 12.5% of the value of the property and the purchase of a condominium will be 6% of its value.
3. Miscellaneous Fees
Once you have received the license, a deposit of 10% of the value of the property; at the time of signing the sale and purchase agreement, is required. The fee of the real estate agent is payable by the seller in case of gross transactions. He also bears 50% of the stamp duties and conveyance costs leaving the remaining 50% to be shouldered by the buyer. In case of net transactions however, the entire burden of realtor fee, legal fee, and stamp duty is paid by the purchaser.
Stamp duty is variable and calculated on the basis of value of property.
- 2% for properties up to $100000
- 3% for properties up to $400000
- 4% for properties up to $500000
- 6% for properties between $500000 and $1500000
- 7% for properties higher than $1500000
Prices of properties in Bermuda are steep, thus you should be prepared to invest money in the range of $3-$45 million for a house or estate and $0.5-$6.5 million for a condominium, for the best value for money you can get.