As a tourist destination, the Bahamas offers seductive sunshine and a relaxed island lifestyle, but retirees who elect to make it their permanent place of residence 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. On the downside, in the Bahamas, the prices of food, clothes, and other essentials are exorbitantly higher than most people are accustomed to paying stateside.
What’s The Minimum I Need To Retire?
Residency Rules in the Bahamas
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.
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 from the government of the Bahamas.
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, according to Numbeo.
Similar to long-term visas, these 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.
Housing in Paradise
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 the center of Nassau is quite the deal at $164 per square foot, according to the website Numbeo.
- 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 issued by the government of the Bahamas lets homeowners reside, enter, and exit the country during the one-year duration of the card's validity.
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.
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.