Generally speaking the title to property in Barbados is unregistered as there are only small areas of the Island where title is registered.
Whilst your lawyer will guide you through the specific details of any given purchase I have set out some options for purchasing property in Barbados:
1. To purchase the property in your own name. This is a simple process which will free you from any onward administration which ownership through a company will require. You will need to bring all of your funds into Barbados so that you will be able to obtain Central Bank approval for your purchase. The downsides to purchasing in your own name are that on sale you will have to pay property transfer tax (currently 2.5% of the sale price) and stamp duty (1% of the sale price). Further you will receive the sale price in Barbados dollars and will have to obtain Central Bank approval for the conversion of any profit made on the sale.
As you will register the funds used to buy the property you will not need permission to take out these funds as by virtue of registration you have an automatic right to take out what you brought into the island. You are normally allowed a reasonable profit on your investment which is usually 10% per annum. If your sale realizes a higher profit than 10% per annum you may be given terms on which any additional sum may be taken out. In my experience it is unusual for terms to be imposed unless your profit is in the millions and I have only ever seen terms imposed when Barbados is experiencing exchange control shortages.
2. To purchase the property in a company incorporated in an offshore jurisdiction. We would normally recommend such incorporation to be in the BVI as this is a jurisdiction which is well regulated and is not tainted with connotations of money laundering. It is also far cheaper in terms of incorporation and administration of the company than jurisdictions such as the Channel Islands. Any offshore company looking to purchase property in Barbados must be registered as an external company in Barbados and will need to upkeep its Corporate records including keeping financial statements current.
The offshore company structure will avoid the payment of property transfer tax and stamp duty on a sale because when you sell you will sell the company and not the property; hence from the Barbados perspective there is no change in ownership of the property as the company will still own the property. You will also be able to offset directors’ expenses and reasonable travel costs to inspect the property against any income received as more expenses are usually tax deductible for a company as opposed to an individual.
Before making a decision as to how to purchase the property you should obtain tax advice from your own accountant as the offshore company sometimes causes the unwanted effect of increasing your domestic tax liability.
In addition to your property purchase you may need guidance on immigration and matters such as taxation, tax residency and domicile.
Zarina Khan is an Attorney-at law who has been practicing in Barbados for 20 years,having graduated from the University of Warwick and being called to the Bar in England (Grays Inn) . Her practice Prospect Chambers specializes in
Property Law,Corporate, Commercial Law, Financing, Family law and Copyright.
Ms. Khan is also a Board Member of the Codrington (IB) International Baccalaureate School of Barbados since 2012)