By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas Real Estate Association’s (BREA) president yesterday likened the profession to “a plane circling in a holding pattern” as it waits to see if the Government will alter proposed tax evasion curbs.

Carla Sweeting, speaking to Tribune Business after the Association’s annual general meeting (AGM), said the measures - which threaten to significantly increase the compliance burden and bureaucracy imposed on Bahamian realtors - had “for once” placed the industry “on the same page” as attorneys.

She added that the VAT Act and Conveyancing and Law of Property Act reforms, if passed into law by Parliament as is, will have “severe consequences” for commercial banks and other mortgage lenders, as well as realtors and attorneys, while revealing there has been no response from the Government to BREA’s call for a rethink.

“No, not a word,” Ms Sweeting told this newspaper, when asked if BREA’s letter to top tax officials prior to the June 6 Labour Day holiday had provoked a response. “In fact, in my report to the membership today, I mentioned that I suspect we are not going to hear anything until after the debate. I don’t suspect anything is going to happen until then.....

“I think they [the Government] might do something. I just have not heard anything so far. Nothing, not even an acknowledgement. That’s not unusual.” However, the Prime Minister is due to wrap-up the Budget debate in the House of Assembly today, and then MP’s will go through the Budget to approve every line item as well as pass all the legislation accompanying the 2025-2026 fiscal plans.

That means time is likely running out for attorneys and realtors to persuade the Government to amend the VAT, Conveyancing and Law of Property Act and other reforms that are viewed as detrimental and unnecessary to how the private sector operates.

Ms Sweeting, meanwhile, said the legal amendments - if passed as is - will require attorneys to ensure all real estate conveyances are recorded in the Registry of Records, and that all due VAT on the sale is paid, before they and realtors are paid their respective fees and commissions. For attorneys, this is normally 2.5 percent of the purchase price, while realtor commissions are typically around 6 percent.

“If this happens it will have severe consequences for us and the attorneys and banks,” the BREA president told Tribune Business. “We are optimistic we can come to a common ground where we can all be happy. It’s like a plane when the air traffic control tower tells you to circle in a holding pattern. I feel like that’s where we are; in a holding pattern.”

Two key reforms to the VAT Act have aroused realtor fears as they make the profession “jointly and severally liable”, along with attorneys, for covering any unpaid VAT on a real estate transaction from their commission if they have already received it.

And the VAT (Amendment) (No2.) Bill 2025, tabled in the House of Assembly alongside the 2025-2026 Budget, also imposes the requirement that realtors must notify the Department of Inland Revenue of all property-related transactions within 30 days of their closing.

Failure to do so, and/or meet this deadline, will again see them held “jointly and severally liable” along with the vendor for a fine equal to 3 percent of the sales price. The Bill currently stipulates that this mandate only applies to sales of “newly-constructed dwellings”, or land to be used for such purpose, but the Prime Minister subsequently said this will be amended to include and cover all real estate deals.

The new measures are part of the Government’s crack down on tax evasion and avoidance related to VAT on real estate sales, which Philip Davis KC told the House of Assembly is estimated to be costing the Public Treasury around $100m per year in lost revenue.

The Conveyancing and Law of Property Act reform, meanwhile, stipulates that all real estate deals will be treated as “void” and of no effect if the relevant conveyance is not lodged and recorded in the Registry of Records. This reform has also been back-dated three years to cover all conveyances from July 1, 2022, onwards.

BREA, in June 5, 2025, correspondence to Simon Wilson, the Ministry of Finance’s financial secretary, and Shunda Strachan, the VAT comptroller and Department of Inland Revenue chief, warned it is “unequitable in law” to impose the compliance burden, and related penalties, for property sales VAT on its members.

It argued that proposed reforms to the VAT Act are unfair to Bahamian realtors because they do not handle any funds related to real estate sales and nor are they responsible for legally closing transactions.

Pointing out that these duties fall to attorneys, not realtors, Ms Sweeting suggested that the Government could employ a much easier method to check whether it is receiving the full VAT due on a Bahamian property transaction. This, she explained, would involve imposing a legal requirement for attorneys to submit the VAT invoices they receive from realtors to the Department of Inland Revenue.

Realtors typically invoice attorneys for their commission once the relevant sale is completed. Ms Sweeting suggested that, by mandating attorneys submit realtor invoices when they pay the due VAT and have the conveyance stamped, the tax authorities will be able to compare the two and determine whether they are collecting the correct amount of tax.

Ms Sweeting, pointing out that responsibility to declare a property’s sale, pay the due tax and ensure the conveyance was lodged and recorded in the Registry of Records previously lay with the buyer and their attorney, she asked: “How did the real estate agent become involved and liable?”

She said it was especially unfair to impose the real estate sales reporting requirement on realtors because, once they have put the deal together, their active involvement in the transaction largely ceases. And, as a result, there is often a time lag before they are made aware a sale has closed, which has implications for meeting the 30-day deadline.

“Under the law of conveyancing in The Bahamas, only attorneys can lawfully convey real property. Real estate agents cannot lawfully convey the title of property. Is the conveyancing act going to be changed or amended?” the BREA president asked. “Real estate agents/companies have very limited knowledge or access to the proceedings and process attorneys do or take. In fact some do not communicate at all.

“Banks are more involved and have knowledge of the entire process. I have also confirmed that, where there is a mortgage, the banks are now issuing two cheques at closing, one for fees (real estate and legal) and one for the transfer, and attorneys have to sign a form that states they are not to pay out until and unless the transfer of property is registered and VAT paid.

“I have also confirmed that it can take up to three months to get confirmation [of] the payment for VAT and recording at the registry, as both are done on the portals and it is very frustrating. If this is the norm, this is going to be a huge problem for our members when they have done their job and expect to be paid at the closing of the transaction.”