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Under the Barbados Land Tax Act, taxes are payable by property owners on the real estate that they own on an annual basis. The land tax year runs from April to March. Rates vary between nil and 0.75% of the value of the property, depending on the value, with a maximum land tax payable of US$30,000. The seller will have prepaid the land taxes before completion of any sale of property and a buyer will be responsible for the months between completion and March of the following year. The taxes to be applied are as follows:
1) Unimproved commercial or residential land is taxed at 0.60% of the site value.
2) Improved value on residential land:
- Up to US$95,000 (exempt)
- On the excess of the improved value greater than US$95,000 but not exceeding US$250,000 (0.1%)
- On the excess of the improved value greater than US$250,000 but not exceeding US$625,000 (0.45%)
- On the excess of the improved value greater than US$625,000 (0.75%)
3) Improved Value on all other property (0.5%)
· Pensioners who occupy their own homes will pay residential rates but on 50% of the amount by which the improved value exceeds US$75,000.
· Land tax is capped at US$30,000 where a dwelling house is used exclusively as a residence by the person who owns the land on which the dwelling house is erected. However, it must be noted that this cap is no longer supported by legislation but this concession continues to be applied in practice by the Barbados Land Tax Department.
· With respect to commercial, industrial, hotel and villa properties, the applicable rate of land tax is 0.65% on the improved value of the property. A rebate of 50% is granted to hotels and 25% to villas, on production of a certificate from the Barbados Tourism Authority.
Municipal Solid Waste Tax
The Municipal Solid Waste Tax Act 2014 (“the Act”) was recently implemented to all property owners in Barbados. According to the Act, there shall be charged and levied on the site value of ‘improved lands,’ a tax to be known as a “municipal solid waste tax”. Improved Land refers to the land where there is an improved value. The tax shall be levied at such rate as may be specified by the Minister by order.
Effect of Tax
The Tax will be charged on the site value of all improved land at a rate of 0.3% effective from April 1, 2014 to March 31, 2015. The Tax payable for this year will be payable on the site value as reflected on the 2014-2015 Land Tax Bill.
When to pay the Tax?
The tax is payable to the Commissioner in two (2) installments:
1) The 1st installment shall be paid on or before June 30th in each year for which the tax is payable. This was however extended to July 28, 2014.
2) The 2nd installment shall be paid on or before December 31st in each year for which the tax is payable.
It must be noted that this installment is payable irrespective of whether the land tax demand notice had been issued by the Commissioner. If you have not received the Land Tax demand notice, you may contact the Revenue Authority at 430-3101 to confirm the site value of the improved land.
Remission or Refund of Tax
If the Minister is satisfied on grounds of undue hardship or for any other reason that it would be just and equitable to do so, he may remit or refund the whole or any part of the tax imposed under the Act, including any penalties thereon, paid by any person.
Where a person fails to pay the tax due or payable under this Act, that person shall in addition to the tax, pay to the Commissioner, a penalty equal to 5% of the amount which was unpaid. An interest rate of 1% per month shall be paid on any unpaid tax or penalty imposed from the prescribed payment date until the date of actual payment.
There has been a 100% remittance granted to the following persons:
1) Pensioners who own properties with improved values of US$95,000 or less.
2) Entities which fall under the International and Regional Agreements.
There has been a 50% remittance granted to the following persons:
1) Owners of land being used for agricultural purposes that have been verified by the Ministry of Agriculture, Food, Fisheries and Water Resource Management.