BERMUDA CONCERNS
Bermuda is a lonely island of elegance and grace in the middle of the North Atlantic, with a beautiful subtropical climate completely at odds with its northern latitude. The Gulf Stream's closeness to the island contributes to its pleasant temperatures, which when paired with its rich soil have created a lush island that is bursting with the hues of the ubiquitous flowers and plants.
Bermuda's perfect economic success, coupled with its abundance of natural fineness, has resulted in a highly educated and professional workforce supported by an advanced infrastructure of support services. These factors have taken Bermuda from being a sleepy vacation destination to a bustling hub for global offshore business.
Having been founded in 1609, Bermuda boasts the oldest democratically elected Parliament outside of the United Kingdom, which dates back to 1620. Being the oldest colony still in existence, Bermuda enjoys tight relations with the United Kingdom, which manages the island's defense and foreign policy and serves as a crucial framework for the local legal system. Although the latter is autonomous, English cases have significant persuasive power in Bermuda Courts, and the Privy Council's Judicial Committee is the ultimate appellate court.
Bermuda is a two-hour trip from the eastern shore of the United States, with daily flights to major cities.
There are flights to London most days of the week, lasting around seven hours. Efficiency and comfort at the destination go hand in hand with ease of access. High-quality lodging and dining options, as well as conveniently accessible sea and land sports, provide leisure and amusement to business travelers drawn by the island's outstanding connections and business acumen.
2. PURCHASING A PROPERTY
The Bermuda Islands are about twenty-one miles long and one mile wide at their widest point. Their total size is around twenty-four square miles. Because of these physical limitations on residential property, it will be clear that the applicable legislation intends to keep most of the housing stock and undeveloped residential land in Bermudian ownership.
The government acknowledges that there is a small market in Bermuda for more expensive real estate, and that non-Bermudians may choose to purchase these and other properties connected to hotel developments for their own personal purposes.
3. A PERMIT TO PURCHASE REAL ESTATE
Any non-Bermudian who wants to buy real estate in Bermuda needs to apply for a license from the Cabinet Office and Minister of Tourism. In addition to filling out the requisite paperwork, applicants must submit two personal references from persons they have known for at least three years, as well as a banker's reference. Although it is preferred, Bermudian referees are not required.
Additionally, proof that Bermudians were given a fair chance to purchase the land must be provided. At the moment, copies of ads that appear online or in local newspapers suffice as proof.
When issued, a license will have several requirements, such as:
that the license holder and his household are the only users of the property for private home use;
that no development or alteration to the property will increase the number of possible housing units;
that the property may only be rented out or used for profit with the Minister's express consent (Note: this restriction does not apply to licenses granted to non-Bermudians who possess Permanent Resident's Certificates, or to licenses to hold hotel residences or tourist accommodations);
that the limits of the property cannot be altered or split; and
If the license holder owns more than one piece of real estate in Bermuda, either directly or indirectly, he is required to sell it within a year of the new license's approval date, or within a maximum of three years, as the Minister may permit.
4. LICENSE COST
Currently, the following costs are required in order to grant a non-Bermudian a license to purchase real estate in Bermuda:
Purchase price of a freehold home: 12.5% of the property's worth
Purchasing a leasehold condominium will cost you 8% of the property's worth.
Acquiring a holiday rental or room in a hotel alongside the intention of keeping it for oneself: 6.5% of the value of the interest or property
Purchasing a vacation house or hotel unit with the intention of adding it to the hotel's inventory: 0% of the value of the interest or property
A permanent resident certificate holder's purchase of a freehold home or a leasehold condominium will yield 6% of the property's worth.
Acquiring any other kind of land not listed above will result in a payment of 5% of the property's or interest's worth.
5. Purchasing a home
To be eligible for acquisition by a non-Bermudian (apart from those holding a Permanent Resident's Certificate), a freehold home must have an Annual Rental Value ("A.R.V.") that is at least equal to the lowest amount that the government periodically sets.
At the moment, the minimum A.R.V. is set at $126,000.00, guaranteeing that the properties that are eligible for non-Bermudian acquisition are only those with greater values. (Note: The A.R.V. is a notional value and does not represent the amount of rent a property would achieve if let on the open market. The Land Valuation Office establishes the A.R.V. from time to time for the purpose of levying land tax, which is payable as a percentage of the A.R.V. calculated on a sliding and progressive scale.
Additional limitations apply, which forbid non-Bermudians from purchasing multi-unit homes unless they are already held by non-Bermudians and at least one of the units satisfies the $126,000.00 minimum A.R.V. requirement.
Non-Bermudians are only allowed to own two residential properties (houses, apartments, or condominiums) at a time. However, they are allowed to buy a third property as long as one of the other two is sold or otherwise disposed of within a year after the third property's license is granted, or for a longer period of time up to three years as the Minister may approve.
Generally speaking, non-Bermudians must sell the property as purchased and are not permitted to subdivide it.A non-Bermudian may keep a portion of the property, including a dwelling unit with an A.R.V. over the minimum, and sell the remaining portion to a Bermudian in the event that the property comprises several dwellings and the subdivision results in such outcome.
6. PURCHASING CONDOMINIUMS OR APARTMENTS
Except for those mentioned in section 7 below, only a few types of non-Bermudians are able to purchase apartments and condominiums: those who hold a residential certificate ("RC"), a permanent resident certificate ("PRC"), or have a close "nexus" to Bermuda (e.g., non-Bermudian parent or child of a Bermudian).For those without a "nexus" in Bermuda, the minimal A.R.V. is $25,800. The minimum for anyone with a "nexus" to Bermuda is nonexistent.
A person may apply for a Residential Certificate ("RC") under the Government's Economic Investment Residential Certificate ("EIRC") program if they invest at least BD$2.5 million in one of a number of designated assets. With the exception of meeting certain health and character requirements, the RC will only be granted upon proof of intention to invest in Bermuda real estate, which makes it one of the specified assets. As a result, non-Bermudians who do not hold RCs can purchase leasehold condominiums for up to $2.5 million. One may deduct the cost of stamp duty and license fee from the investment value if they are paid on the acquisition price.
7. TAXES
Those who typically reside in Bermuda are not subject to income or profit taxes, withholding taxes, capital gains taxes, capital transfer taxes, or inheritance taxes. As was already noted, land owners are required to pay land tax, which is computed as a proportion of the A.R.V. There is ad valorem stamp duty on some documents, such as mortgages and transfers of freehold and leasehold property. Additionally, only the value of the Bermuda asset is subject to ad valorem stamp duty when it comes to the Affidavit of Value of an estate belonging to a deceased individual who owns property in Bermuda.
FINAL VERDICT
This book aims to address the broad outlines of buying real estate in Bermuda. Please get in touch with our Real Property Department if you need any additional explanation or more thorough information.
This article's material aims to serve as a broad introduction to the topic. You should consult an expert on your particular situation.
