The Bahamas has become a hot property in the US, with many US-based real estate professionals buying properties there and then selling them to wealthy Americans, many of whom buy them from the Bahamas.
The Bahamas is not a US jurisdiction and does not have the same tax, banking and safety net that the US has, according to a report by real estate agency the National Association of Realtors.
It is one of a handful of countries where US real estate is taxed at a lower rate than in other countries.
But the Bahamas is also one of the few countries in the world where the country is exempt from taxation on profits made in the country.
The report said there are currently a handful in the Bahamas where US citizens can legally earn a tax-free income in a US property, which is typically around $5 million.
It said this tax exemption is “unlikely to be extended to US-listed property.”
The Bahamas has an annual tax rate of about 0.01 per cent on all income above $500,000.
The report said US property tax in the island nation is also a very low rate, and US property is not taxed in a country with a US-style tax system.
It added that US property sales and the use of the Bahamas as a destination for international travel are among the activities that generate income for the Bahamas, which also has no capital gains tax.
In a statement to The Hindu, NAR said that the Bahamas has a tax system similar to that in the UK and Ireland and that US real property investors do not face any capital gains taxes in the Cayman Islands.
The tax exemptions and exemption from capital gains taxation are “not universal,” the agency said, and “it is possible to build a property portfolio that is not subject to US taxation, thereby avoiding the US tax on profits earned in the United States.”
The report, published on the website of the National Realtor Association, said it found no evidence that the tax exemption from US tax applies to US property sold to US residents.
The Bahamas does not offer a US resident an exemption from the capital gains or property tax of their home country.