As a tourist destination, the Bahamas offers seductive sunshine and a relaxed island lifestyle. But retirees who elect to make the Bahamas their permanent place of resident can likewise reap significant tax advantages. Not only are full-time residents spared income tax, but they can also sidestep capital gains taxes, wealth taxes, and gift taxes. But on the downside, the prices of food, clothes, and other essentials are exorbitantly higher in the Bahamas, than most people are accustomed to paying stateside.
What’s The Minimum I Need To Retire?
While there are several ways of establishing legal permanent residence in the Bahamas, the most direct approach entails buying property valued at $500,000 or more. But those who can't manage such an expensive price-tag can buy a cheaper home, which qualifies them to receive a Home Owner's Resident Card. Similar to long-term visas, Resident Cards let homeowners reside in the Bahamas, affording them the freedom to enter and exit the country, during the one-year duration of the card's validity. The card annually costs $500, with an initial $100 processing fee, and is good for the whole family.
Key Takeaways [PLEASE PLACE THESE IN A PROPER CALL OUT BOX UNDER "WHAT YOU SHOULD KNOW]
--The Bahamas can be an attractive destination for retirees, because full-time residents are spared significant tax obligations.
--The prices of many imported consumer goods are costly, due to customs, shipping, and other fees.
--A Home Owner's Resident Card let homeowners reside enter and exit the country, during the one-year duration of the card's validity.
For new residents, there are different tax implications and logistical considerations with buying an existing owner-occupied existing home, versus building a new home from scratch, on undeveloped land.
- Residents who plan to build a home on five or more acres of land must apply for a permit. They must also shell out 2.5% of the purchase price in legal fees, along with a flat 2.5% tax called “stamp duty,” as well as a 7.5% value-added tax (VAT).
- Real estate taxes on owner-occupied property are comparatively straightforward, with no tax burdens on properties priced at less than $250,000. Owners of more expensive homes should expect to pay a modest amount, ranging from 0.75% to 1% of the property's value.
Although new home paperwork can be complicated, the Bahama's affordable real estate prices are arguably worth it. For example, a 1,000-square-foot apartment in Nassau is quite the deal, at less than $160,000.
Food, Transportation, and Clothing
No matter how you slice it, "island prices" can be harsh pills to swallow. Whether you're purchasing a box of corn flakes, or a pair of jeans, you’re likely buying imported goods, which are invariably costlier, due to shipping, freight, and customs fees. For example, a midsize car in Nassau will cost about $15,000 more than a comparable model purchased elsewhere. So you might want to think twice about buying that Toyota, which could cost upwards of $45,000.
The Bottom Line
Though the cost of living is more expensive than other retirement destinations, the Bahamas makes up for it with its more affordable homes, and idyllic quality of life. Sunshine, fresh air and the soothing sound of the surf make the Bahamas a dream location for those looking to blissfully enjoy their golden years.
[Important: While groceries are generally more expensive in the Bahamas, locally sourced staples like cheese and bread are somewhat more reasonably priced, but still cost from 10% to 50% more than U.S. prices.]