By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The execution of real estate-related VAT reforms must create “a win-win situation” for both industry and government, it was argued yesterday, amid the ongoing wait for “important” implementation guidance.

David Morley, who chairs the Bahamas Real Estate Association’s (BREA) legislative committee, told Tribune Business that publication by the Department of Inland Revenue (DIR) of guidance notes detailing the processes and mechanisms for how the changes will work in practice is still awaited even though these took effect almost six weeks ago.

Describing their release as “very important” for both attorneys and realtors, and the property market’s smooth functioning, he added that “everybody’s trying to comply” with the Government’s drive to extract increased VAT on real estate sales but the guidance notes are critical to ensure all parties know what to do and when.

Shunda Strachan, the Department of Inland Revenue’s acting chief valuation officer and controller, yesterday told the Office of the Prime Minister’s weekly media briefing that the guidance notes are due to be published imminently on the tax authority’s website. However, a Tribune Business reporter was unable to locate them before this newspaper went to print.

“BREA had a meeting with the Department of Inland Revenue over this,” Mr Morley, Morley Realty’s owner/broker told this newspaper over the guidance notes. “I would guess that was close to two weeks ago.  At that time they indicated they were drafting guidance notes.

The impression we got from them was not only are they giving guidance notes for real estate agents, but they’re going to have different sets for attorneys so everyone has a clear understanding of what they’re supposed to do and not to do. To-date, we haven’t seen anything. I just e-mailed the Department of Inland Revenue this afternoon following up with them.

“Based on our discussions with them [the Department of Inland Revenue], they were going to share with us what they were considering for real estate and allow us to provide some feedback. I think they’ve come to realise it’s got to be a win-win situation and they cannot over-burden us with requirements that are impossible to fulfill.”

Under reforms to the VAT Act, realtors now have to notify the Department of Inland Revenue of any land, property or real estate sales within 30 days of the relevant conveyance’s execution otherwise they - along with the seller - could be subject to a fine as high as 3 percent of the purchase price.

However, Mr Morley reiterated that Bahamian realtors pay no part in closing a transaction as this work is conducted by attorneys. As a result, BREA and its members often do not know when a sale closes or the conveyance is executed, thereby exposing them to missing the 30-day reporting deadline and incurring a financial liability for something they are not responsible unless they monitor the deal’s progress.

Pointing out that, once they put a deal together and pass a “signed offer letter” to an attorney, realtors have no role in the transaction until they receive their commission on closing, Mr Morley added: “We’re trying to assist them as much as possible. They [the Department of Inland Revenue] have the ultimate hand in doing what they want to do.”

He explained that BREA has submitted alternatives to the tax authorities over the “trigger point” for when the clock starts running on the 30-day reporting deadline. Rather than use the date the conveyance is executed, the Association has suggested making this either the date when the sales agreement is concluded or the date when the sale completes and they receive their commission.

“We have them some good feedback on points like that,” Mr Morley said. “We said that if you’re sticking with 30 days from the conveyance, you’ll need to extend that to 90 days given that attorneys have 180 days [from the conveyance’s execution] to pay the VAT.

“How can they hold us liable for that when we have no way to control that? We have no control mechanism to get that information. We want to have co-operation with them but they have to understand our role in real estate transactions.”

As to the need for the guidance notes, he added: “I think they’re going to be extremely important. I know from the legal profession, the lawyer’s side of it, they’re also involved in deals with buyers getting mortgages from the banks. The banks interpret these things their own way, and lawyers have to work closely with the banks on mortgages.

“While they intend to collect as much VAT as possible, they cannot cripple the need to conduct real estate transactions with financing..... At this point, we’re just waiting to see what these guidance notes look like. I know things are in progress. Everybody’s trying to comply as much as they can right now, but it would be a lot more helpful if the guidance notes were put in place so people know what to do and when.

“I’ve spoken to a couple of attorneys and everyone is being cautious right now. Most of them are saying there’s only another couple of steps they have to include in conveyancing work. For us, they’re trying to bring us into a situation we’ve never been involved with before. How’s it going to affect us and when? We’ve got to get there one step at a time,” Mr Morley added.

“Hopefully our discussions have been helpful. We’ve got to create that win-win situation; something that works for us and effectively for them [the Department of Inland Revenue]. They have every right to get paid. We want them to be paid, but let’s be fair.”

Morley Realty, in its analysis of data from BREA’s multiple listings system (MLS), which now includes 76 percent of the Association’s registered firms as members, said the three months to end-June 2025 had been “one of the strongest quarters” for sellers with New Providence homes on average achieving 93.3 percent of their asking price.

“The list-to-sale price ratio stayed within a tight band but saw notable shifts. New Providence homes climbed to 93.3 percent, and land jumped to 95.9 percent, one of the strongest quarters for sellers. Grand Bahama land also rose to 95.3 percent,” the firm said in its analysis.

“Abaco and Eleuthera homes posted slight declines, while Exuma held at a strong 94.5 percent despite the small decline. Most sellers across the islands continued to receive offers close to the asking price. And, while new listings declined for a number of islands, New Providence saw quarter-over-quarter increases of 12.7 percent and 53.1 percent for homes and land coming on to the market, respectively.

“New listings declined across most markets this quarter. Exuma and Eleuthera saw the sharpest quarter-over-quarter drops, with Exuma home listings down 53.8 percent and Eleuthera homes down 20.5 percent. Abaco homes posted a modest 8.6 percent gain, and New Providence homes rose by 12.7 percent, indicating stable seller interest in those areas,” Morley Realty added.

“However, land listings in nearly every market fell significantly - Exuma land fell 52.3 percent - highlighting a tightening of available inventory in that segment.”