Understanding Real Estate Taxes and Costs in the Caribbean

03/10/2025

International Outlook

The allure of Caribbean real estate – from turquoise waterfront villas to prime commercial resorts – comes with a complex web of taxes, fees, and regulations that sophisticated investors must navigate. In this guide, we delve into the full spectrum of costs and tax considerations U.S.-based investors face when acquiring and holding property in the Caribbean. Drawing on deep expertise in luxury and commercial real estate, we address common questions and compare key markets like the Bahamas, Barbados, the Dominican Republic, St. Lucia, and Grenada. The goal is to provide clarity on everything from purchase and holding costs, to income and capital gains taxes, foreign ownership rules, repatriation of funds, and even residency or citizenship incentives tied to real estate investment.

Acquisition Costs: Taxes and Fees When Buying Caribbean Property

What taxes do you pay when buying real estate in the Caribbean? Purchasing property in any Caribbean nation involves certain transaction costs and taxes. While each country has its own fee structure, buyers and sellers should be prepared for some combination of transfer taxes (often called stamp duty), legal fees, and sometimes special licensing fees for foreign buyers. Below are typical acquisition costs to budget for:

Property transfer taxes (stamp duty): Most islands charge a transfer tax or stamp duty on real estate transactions, ranging roughly from 2% up to 10% of the purchase price. For example, the Bahamas levies a 10% tax on property conveyances (structured as VAT on the property sale, usually split 50/50 between buyer and seller). Barbados charges a 2.5% transfer tax (above a small exempt amount) plus 1% stamp duty, typically paid by the seller on closing. The Dominican Republic imposes a one-time 3% title transfer tax on the property value (usually paid by the buyer). St. Lucia and Grenada have stamp duties around 2% to 5% on purchases, although in St. Lucia this is complemented by a separate vendor’s tax on foreign sellers (more on that later).
Legal and notary fees: It is customary (and prudent) to engage local attorneys for a property purchase. Legal fees in the Caribbean generally run about 1%–3% of the purchase price, often plus VAT. For instance, Barbados has a regulated scale for conveyancing fees (approximately 1.5% on average-sized transactions) as outlined by local law. These fees cover title searches, drafting the sale agreement, and ensuring the property is free of liens. Some countries (like the Dominican Republic) also require notary fees and modest registration charges to record the new title.
Real estate agent commissions: Commissions in the Caribbean are often around 5%–6% of the sale price and typically paid by the seller. In most cases the listing agent splits the commission with the buyer’s agent. High-end markets (e.g. luxury villas in the Bahamas or Barbados) tend to adhere to this international standard. Keep in mind that agent commissions may be subject to VAT in certain jurisdictions (the Bahamas, for example, applies a 12% VAT on realty services such as commissions and legal fees).
Foreign buyer licensing fees: A crucial cost for foreign investors can be the **Alien Landholding License** or its equivalent, required by some nations to permit non-citizens to acquire property. Not all Caribbean countries mandate this, but many in the Eastern Caribbean do. For example, St. Lucia requires foreign individuals to obtain a landholding license, which involves a background check and fees. Rather than a straight percentage, St. Lucia’s license fee is tiered by land size (approximately $2,500 up to $20,000 USD depending on acreage). This is in addition to a one-time application (Certificate of Eligibility) fee of $3,000 (for a 1-year certificate) or $10,000 (for a 10-year term) that must be maintained as long as the property is owned. Grenada and Dominica likewise charge foreign buyers about 10% of the property value for an alien landholder license (though investors often circumvent this by pursuing citizenship-by-investment in those countries). By contrast, the Bahamas, Barbados, and the Dominican Republic impose no special license fee on foreign buyers – the Bahamas simply requires a registration of foreign purchases with the Investment Board (and only a permit in cases where the parcel exceeds 2 acres or is intended for rental/commercial use).
Due diligence and miscellaneous costs: Beyond the headline taxes, budget for ancillary expenses such as property surveys, valuation fees, and insurance on the transaction. Luxury buyers may also opt for title insurance (available in places like the Bahamas at roughly 0.2%–0.3% of value) for added peace of mind on the title’s validity. Additionally, some countries incentivize certain purchases: for instance, buying within an approved development project in St. Kitts or Antigua can waive the need for a foreign license or reduce stamp duties as part of their investment incentives.

Overall, acquisition costs in the Caribbean tend to be a bit higher than a typical U.S. real estate deal (where a buyer might only pay minor closing costs). Here, between government transfer taxes and legal fees, one should expect the “round-trip” transaction cost (buying then later selling) to range from about 10% up to 20% of the property price, varying by country. High-end investors often factor these upfront taxes into their long-term investment return models. The good news is that in several jurisdictions – notably the Bahamas and Cayman Islands – the absence of income or capital gains taxes (discussed below) can offset the initial transaction levy over time.

Ongoing Ownership Expenses: Property Taxes and Holding Costs

Do you pay property tax on real estate in the Caribbean? In most cases, yes – the majority of Caribbean nations levy annual property taxes or similar municipal charges on real estate. However, tax rates are generally modest and in some cases certain properties or owners are exempt. It’s important to understand the holding costs as they impact the net yield and carrying cost of your investment. Key considerations include:

Annual property taxes: Each country sets its own property tax regime, often with progressive rates or thresholds. For example, Barbados charges an annual land tax of 0.1% to 1% of the property’s value, with owner-occupied residences benefitting from a tiered system (the first BBD $150,000 of value is tax-free, higher bands escalating to 0.7% and topping out at 1% on value over BBD $850,000). In the Dominican Republic, only properties valued above approximately RD$10.2 million (about $170,000 USD) are subject to the annual property tax (Impuesto al Patrimonio Inmobiliario); the tax is 1% of the value above that threshold, and properties below the cutoff owe no annual tax. By contrast, St. Lucia applies a flat 0.25% annual tax on the market value of residential property (commercial property is 0.4%). The Bahamas also imposes real property tax on homeowners (including foreign owners) on a sliding scale – for example, owner-occupied homes might pay around 0.625% on value between $250k and $500k, and 1% on value above $500k, with certain first-home or family-island exemptions for Bahamian citizens. In several smaller nations like **Antigua & Barbuda or the Cayman Islands, there is actually no annual property tax** at all, which can be a draw for long-term investors – they instead rely on higher transfer duties or other revenues.
Insurance and maintenance: Beyond taxes, owning Caribbean property entails upkeep costs that should not be overlooked, especially for high-value assets. Hazard insurance (hurricane, storm surge, earthquake coverage) is a must and can be significant – premiums in hurricane-prone islands often run higher than U.S. mainland rates. Maintenance of a beachfront villa, for instance, might involve high costs for security, landscaping, pool service, and mitigating the corrosive salt-air climate. If the property is within a resort or condo development, count on homeowner association (HOA) or strata fees to cover shared amenities and maintenance. Luxury condominiums in Barbados or the Bahamas can easily have monthly community fees in the hundreds or thousands of dollars, which fund security, landscaping, and sometimes club facilities.
Utilities and local services: The cost of utilities (electricity, water, broadband) and local services (garbage collection, property management) also factor into holding costs. While these are not “taxes,” they affect the cost profile of owning overseas real estate. Energy costs in the Caribbean tend to be higher than U.S. averages due to importation of fuel, though some islands offer renewable energy incentives. Wealthy investors often budget for a local property manager or caretaking staff, especially if the home will be used part-time or rented out to vacationers.

On the whole, property holding costs in the Caribbean are manageable and often lower, as a percentage of asset value, than in high-tax jurisdictions in the U.S. or Europe. Many investors are pleasantly surprised that their annual property tax bill for a Caribbean estate could be a fraction of what it would be for a similarly priced property in, say, New York or California. (For instance, property tax on a $2 million home in Florida might vastly exceed the annual tax on a $2 million beachfront home in Grenada, where rates cap out around 0.8% of value.) Still, one should perform country-specific due diligence: some locales periodically reassess property values, and special levies can exist for certain zones or resort areas. The bottom line is that understanding the local property tax regime helps you project cash flows and net holding costs accurately.

Taxes on Rental Income from Caribbean Real Estate

Is rental income from Caribbean property taxed? If you generate rental income from your Caribbean property – whether from long-term tenants or short-term vacation rentals – you may be subject to local income taxes on that revenue. The tax treatment varies widely across the region:

Tax-free rental havens: A few jurisdictions impose no personal income tax at all, meaning rental income is not taxed locally. The prime example is the Bahamas, which has no income tax, no rental tax, and no capital gains tax on individuals. Similarly, Cayman Islands and St. Kitts & Nevis do not tax personal income, making them attractive for those aiming to maximize rental yield (though keep in mind these places may have higher property acquisition costs or other fees).
Flat or reduced rates for rental income: Several countries offer a favorable flat tax on residential rental income. Barbados is a case in point: rental income from residential property is taxed at a flat 15% rate for both residents and non-residents (with applicable deductions for expenses). In Barbados, landlords who are not tax-resident face an additional 25% withholding on gross rent paid, but that withholding is creditable against the 15% tax on net income – effectively ensuring foreign investors pay the same 15% in the end, albeit via a withholding mechanism. Montserrat and a few other territories also use a flat rate on certain rental earnings (often in the 10–20% range).
Progressive taxation on net income: In some larger economies like the Dominican Republic, rental income is taxed as ordinary income subject to the normal tax rates. The Dominican Republic distinguishes between residents (who pay tax on net rental profits at the general progressive rates, up to 25% for individuals) and non-residents (who are typically subject to a flat withholding tax). Notably, non-resident landlords in the DR face a 27% withholding on gross rental income, which approximates the top individual rate. However, expenses related to generating rental income (maintenance, property management, interest, etc.) are deductible if you file a tax return, potentially reducing the effective tax below 27%. In St. Lucia, rental income is also treated as part of normal taxable income – foreigners earning rental revenue in St. Lucia would pay the same progressive rates as locals (ranging from 15% up to 30% on higher income brackets) after allowable expense deductions. Grenada similarly taxes net rental income at its standard income tax rate (which is 28% on amounts above a small exemption), though compliance enforcement on casual villa rentals can be variable.
Special incentives and exemptions: Many Caribbean governments incentivize certain rental activities, especially in the tourism sector. For example, the Dominican Republic’s Confotur law provides tax breaks for approved tourism development projects – a buyer of a Confotur-approved condo or villa may enjoy a multi-year exemption on property tax and even income tax from rentals in some cases. Some jurisdictions waive income taxes for a set period on income derived from specific developments or economic zones. It’s worth exploring if your intended investment qualifies for any such incentives. In certain cases, opting for an approved Citizenship by Investment project (for instance, buying a unit in a government-sanctioned resort development in St. Kitts, Antigua, or Grenada) can confer tax advantages as well as an eventual passport.

Overall, prospective investors should project their after-tax rental yields by country. For U.S. investors, remember that even if a Caribbean country doesn’t tax your rental income or taxes it lightly, U.S. tax obligations on foreign income still apply (though you may use the Foreign Tax Credit to offset any local taxes paid). From a strategic standpoint, high-end investors sometimes structure their property ownership through offshore companies or trusts to optimize tax treatment. For instance, owning Barbados property via a company can sometimes convert rental income into corporate dividends or defer taxation. These strategies require expert advice and careful adherence to both local and U.S. laws, but they illustrate the level of planning a seasoned investor considers when entering a new market.

Selling Your Property: Capital Gains Tax and Exit Charges

Do you pay capital gains tax when selling Caribbean real estate? One of the attractions of investing in Caribbean real estate is the generally benign treatment of capital gains. Many island nations impose no dedicated capital gains tax on real estate sales by individuals. However, that doesn’t mean selling is tax-free – most jurisdictions simply use other mechanisms (like transfer taxes or differential treatment for foreign sellers) to tax property transactions. Here’s a breakdown of what to expect when you exit an investment:

No capital gains tax – but transfer taxes apply: Countries such as the Bahamas, Barbados, St. Lucia, and Grenada do not charge a separate tax on the profit you make from a property sale. Instead, they levy transaction taxes regardless of gain. For example, Barbados has no tax on capital gains per se, but the seller must pay 2.5% transfer tax (on the gross sale price above a small exemption) plus 1% stamp duty on the transaction. This is due at closing and effectively reduces the seller’s net proceeds, functioning as a modest substitute for a capital gains tax. St. Lucia likewise has no capital gains tax on paper; instead, the government takes a 10% stamp duty on property sold by a non-citizen (if you are a foreign owner in St. Lucia, 10% of your sale price goes to the government on sale). A St. Lucian citizen selling property pays a lower rate (around 5%). In Grenada, there is a similar split – citizens pay 5% and foreign sellers pay 15% transfer tax on sale. These one-time transfer levies can be viewed as the government capturing value from appreciation without formally calling it a “capital gain” tax.
Countries with capital gains taxation: The Dominican Republic stands out as a larger economy that explicitly taxes capital gains. If you sell property in the DR for a profit, the gain is treated as ordinary taxable income. For individual sellers, that means the gain is taxed at the progressive income tax rate (up to 25%). Corporate sellers or non-resident individuals may effectively pay a flat 27% on the gain (the standard corporate tax rate). The taxable gain is calculated in local currency with cost basis indexed for inflation, which provides some relief over long hold periods. It’s worth noting that if you have owned Dominican property for many years, inflation adjustments can reduce the effective taxable gain significantly. Still, compared to zero-gains-tax jurisdictions, the DR’s policy is a crucial consideration – investors expecting big appreciations will want to factor in that roughly one-quarter of their profit could go to the tax man. Puerto Rico (while not covered in this article’s scope) also taxes capital gains for non-residents, as do a few other regional territories tied to larger nations.
Indirect and alternative strategies: High-end investors sometimes employ strategies to minimize taxes on exit. One common tactic in Barbados, for instance, is to hold property in an offshore company and then sell the company shares rather than the property itself. Because the property’s title doesn’t change hands, Barbados transfer taxes (and exchange controls) can potentially be bypassed – the sale occurs offshore. (A Barbados-domiciled buyer would still eventually pay transfer taxes when “regularizing” title, but an international buyer might be willing to purchase the company shares and continue the structure). In Grenada or Antigua, some investors obtain local citizenship through investment; as citizens, when they resell, they qualify for the lower “citizen” transfer tax rate (e.g. 5% instead of 15% in Grenada). These methods require professional guidance and come with other costs, but they underscore the creative measures sophisticated investors consider in the Caribbean to lawfully reduce tax drag on their returns.

In summary, while outright capital gains taxes are rare in the region, you will encounter some form of tax upon selling – be it a transfer tax, stamp duty, or withholding on gains. Always compute your expected net proceeds after these charges. The relatively low tax burden on capital appreciation is a major selling point for Caribbean real estate as an asset class, especially when contrasted with the high capital gains taxes in many U.S. states. It incentivizes long-term investment and portfolio growth in the region, as investors can often reinvest their sale proceeds with minimal erosion from local taxes.

Foreign Ownership Rules and Restrictions

Can foreigners buy property in the Caribbean? Yes – foreign individuals and companies routinely purchase real estate throughout the Caribbean, but each country has its own legal framework governing such investments. Understanding the local ownership rules is essential for a smooth acquisition and for protecting your rights. Here are the key points by country:

Bahamas: The Bahamas welcomes foreign buyers, who enjoy the same property rights as Bahamian citizens for most property types. There is no requirement for special permission on standard residential purchases under 2 acres. The process is straightforward: foreign buyers simply register their purchase with the Central Bank’s Exchange Control Department and the Investments Board after closing (as required by the International Persons Landholding Act). Only if the property is over 2 acres, intended for commercial development, or being rented out do you need a permit from the Bahamas Investment Authority. Notably, Bahamas property is typically freehold (few exceptions like crown lease lands), and the legal system is based on English common law – giving robust title security. Foreign investors in the Bahamas often appreciate the stable legal regime and the fact that property ownership can also pave the way to a prestigious permanent residency (granted routinely for home purchases above ~$750,000).
Barbados: Barbados imposes no outright restriction on foreign ownership – non-nationals may purchase freehold property without a special license. That said, the country maintains exchange controls on foreign currency. Practically, this means a foreign investor must register the funds used for purchasing Barbados real estate with the Central Bank of Barbados. This registration ensures that when you eventually sell, you will be allowed to repatriate the proceeds (up to the amount you brought in, plus a capital appreciation allowance). Barbados’s legal system (also common law-based) and strong title registry make it a very secure environment for property rights. Most high-end purchases here are handled via reputable local attorneys who manage Central Bank approvals and ensure compliance with any forex rules. Barbados also offers certain residency permits for major investors (e.g. the Special Entry and Residence Permit for high net worth individuals), but ownership itself is not restricted.
Dominican Republic: The Dominican Republic is one of the most open markets in the Caribbean for foreign buyers. There are **no citizenship or residency requirements** – foreigners can own land and structures outright in their own names, just as locals can. The DR’s property registration system (Torrens title system) registers your title and provides a certificate of title guaranteed by the state. One formality is that a foreign buyer will need a Dominican tax identification number (known as an RNC for companies or a cédula number for individuals) to process the purchase and pay the appropriate transfer taxes, but this is a simple administrative step. Foreign investors are protected by law and even have recourse to investor dispute mechanisms under DR-CAFTA if needed. The lack of ownership barriers, combined with the DR’s large economy and tourism industry, has made it a hotspot for U.S. and European buyers. Do note that certain coastal or border lands have historically had restrictions (for national security, foreigners couldn’t own near borders in the past), but many of those rules have relaxed, especially in designated tourism zones.
St. Lucia: As a smaller Commonwealth country, St. Lucia does require foreign nationals to obtain an Alien Landholding License (ALHL) to own property (unless you obtain citizenship in St. Lucia, such as through their Citizenship by Investment program). The license process, as discussed earlier, involves an application, fees, and can take a few weeks for approval. It’s not a prohibitive barrier, but it is an extra step with additional cost (several thousand dollars in fees). Once licensed, foreign owners have the same rights as locals in terms of freehold title, and they can hold the title personally or in a corporation. Many investors navigate the ALHL requirement with the help of local attorneys, and some opt to invest via the citizenship route to sidestep the license altogether. It’s worth noting that St. Lucia does not impose any special ongoing levies on foreign-owned property beyond the standard property tax – the playing field after purchase is level.
Grenada: Grenada similarly mandates an Alien Landholding License for foreign buyers (outside of its citizenship program). The license fee in Grenada is approximately 10% of the property’s value, which is significant and should be factored into the acquisition cost. However, if a foreign investor goes through Grenada’s Citizenship by Investment (CBI) program and becomes a citizen, they no longer need that license and can own property freely (which also saves that 10% fee). This has made Grenada’s CBI program quite appealing: for a minimum real estate investment of $220,000 (in an approved project) or $350,000 (for an independent property) plus fees, you can obtain Grenadian citizenship, thereby eliminating future licensing hurdles and qualifying for tax breaks. Aside from the license issue, Grenada imposes no restrictions on the type or size of property foreigners can buy – investors have acquired everything from boutique hotels to private islands. The legal system (based on common law) provides strong title protection. Grenada even allows title to vest in foreign-owned companies or trusts, which can be useful for estate planning or liability purposes.

In all cases, foreign investors are wise to conduct thorough due diligence and work with experienced local counsel when purchasing. Title insurance is available in many Caribbean markets and can add an extra layer of protection. It’s also important to be aware of any *specific* restrictions that might exist: for example, some nations have environmental protection zones, agricultural land quotas, or historical heritage sites where special rules apply regardless of the owner’s nationality. But broadly speaking, the Caribbean is very welcoming to foreign capital in real estate – property ownership by non-citizens has been a cornerstone of luxury development and economic growth in the region, and governments generally facilitate these investments rather than hinder them.

Repatriating Funds: Moving Money Out After Selling

Can you repatriate your money after selling a property in the Caribbean? For most Caribbean nations, foreign investors can indeed take their sale proceeds and rental income out of the country, but the ease and timing of repatriation can vary. Currency convertibility and foreign exchange rules are critical considerations when you plan your exit strategy. Here’s what to know:

Freedom in US-dollar linked economies: Several Caribbean countries effectively operate in U.S. dollars or maintain a hard peg, which simplifies repatriation. The Bahamas, for instance, pegs its Bahamian dollar 1:1 to the U.S. dollar. Foreign investors who registered their initial investment with the Central Bank can repatriate the full proceeds of a sale in the original currency (usually USD) without hindrance – this step is key to ensure you’re allowed to remit out your funds. In practice, a Bahamas property sale by a U.S. investor often takes place in USD or equivalent, and the seller can move those funds abroad once any local tax obligations are settled. Likewise, nations using the Eastern Caribbean Dollar (XCD) – such as St. Lucia and Grenada – have their currency fixed to the USD (at ~2.7 XCD = 1 USD). The XCD is fully convertible and has historically stable monetary policy under the Eastern Caribbean Central Bank. Converting your XCD sale proceeds to USD and wiring them to the U.S. is usually straightforward via local banks, as long as you can show the funds come from a legitimate sale. There are no foreign exchange controls in these countries that trap investors’ money; the main consideration is timing your conversion if local currency inflation or devaluation is a concern (which, for XCD, it generally has not been).
Managed exchange regimes: A few countries have more managed currency environments. Barbados stands out – it has an officially pegged currency (BD$2 = US$1) but also has/had exchange controls to regulate flows of foreign currency. As mentioned earlier, the Central Bank of Barbados historically allowed an investor to take out their original investment plus a capped appreciation (often cited as 4–8% gain) immediately, with any remainder of the profits repatriated in installments (e.g. up to $100,000 USD per year) under prior guidelines. This policy was designed to prevent sudden large outflows from destabilizing reserves. In practice, many foreign sellers in Barbados do apply for and receive special permission to repatriate larger sums (especially for genuine divestment like retirement or medical needs). Still, it’s a process – you don’t automatically wire out a multi-million-dollar sale overnight. Sophisticated investors plan for this by structuring ownership through offshore entities or ensuring any required approvals are lined up in advance. The Dominican Republic, on the other hand, has a freely floating currency (DOP). Foreign investors can convert DOP to USD at market rates and expatriate funds freely; the government places no quota on legitimate capital repatriation. The main consideration is currency fluctuation – if the Dominican peso depreciates between your purchase and sale, that can affect your returns in USD terms. Some investors choose to hold Dominican assets in USD or hedge currency if possible (e.g. some tourism developments transact in USD to avoid FX risk).
Tax clearance and documentation: One commonality across countries is the requirement to clear any local taxes or liens before repatriation. Usually, you must show proof that you paid the property transfer taxes, any capital gains or income taxes due, and sometimes obtain a tax clearance certificate. Banks will typically ask for the sale contract and evidence of tax compliance when processing large outbound transfers for a property sale. Ensuring all your ownership documents were properly registered from the start (purchase registration, any prior Central Bank registration, etc.) makes this final step smoother. For example, in the Bahamas, having your investment registered with Exchange Control from day one means the repatriation of sale proceeds is more or less a formality; without that registration, a foreign seller might face delays or limits converting BSD to USD.

In summary, Caribbean investments can be confidently converted back into hard currency returns, especially in the many USD-linked economies. The key is to follow the rules: register foreign investments where required, stay in compliance with local tax laws, and plan ahead for any bureaucratic processes that might slow the outflow of funds. Many veteran investors also advise keeping some banking locally (e.g. maintaining a local bank account during ownership), as it eases transactions like collecting rents and handling sale closings, before ultimately moving money offshore. Working with banks that have international desks or correspondents in the U.S. can further simplify larger transfers. Ultimately, with proper planning, you can enjoy your Caribbean returns and bring the profits home.

Citizenship and Residency Incentives for Real Estate Investors

Do any Caribbean countries offer citizenship or residency by investing in real estate? Yes – the Caribbean is famous for its **Citizenship by Investment (CBI)** programs, several of which feature real estate investment as a qualifying path. For high-net-worth investors, these programs can provide not only a second passport or residency but also tax advantages and business opportunities. Here’s an overview of the key incentives tied to property investment:

Citizenship by Investment Programs: Five Eastern Caribbean countries currently run CBI programs that grant full citizenship (and a passport) in exchange for a substantial investment, often in real estate. These include **St. Kitts & Nevis, Antigua & Barbuda, St. Lucia, Grenada,** and **Dominica**. The typical model is that an investor purchases government-approved real estate (for example, shares in a luxury resort project or a private villa) above a minimum price threshold, and after a due diligence process, is granted citizenship. Minimum investment amounts range from around $200,000 up to $400,000 USD depending on the country and whether you invest jointly or alone. St. Lucia’s program, for instance, allows citizenship with a real estate purchase of at least $300,000 in an approved development (along with government fees). Grenada requires a $220,000 minimum (if co-investing in a project) or $350,000 for a single investor property. These second passports are valuable: they often come with visa-free travel to many countries, and in the case of Grenada, citizenship even opens the door to the U.S. E-2 investor visa for those looking to do business in America. From a real estate perspective, buying through CBI sometimes comes with tax perks – approved projects might enjoy property tax waivers or duty-free import of construction materials, etc., as part of the government’s incentive to attract development.
Residency-by-investment and special visas: Other Caribbean locales offer residency (as opposed to citizenship) in return for investment. The **Bahamas** has a well-known policy granting accelerated permanent residency to foreign purchasers of qualifying real estate. Generally, acquiring a home valued above $750,000 can qualify an investor (and their family) for permanent residency status in the Bahamas, with an even faster process for investments above $1.5 million. While this is not citizenship, Bahamas residency is highly prized – it allows you to live tax-free in the Bahamas year-round if you choose (remember, the Bahamas levies no income tax on residents or citizens). **Barbados** does not have a formal citizenship-by-investment program, but it introduced special 10-year renewable residency permits for high-net-worth individuals and investors, and it famously created the “Barbados Welcome Stamp,” a one-year remote work visa that drew many affluent professionals during the pandemic. Purchasing property in Barbados can support a residency application (demonstrating you have means and ties to the country), and those who invest significantly or contribute to the economy may get favorable consideration for longer stays. Similarly, the **Dominican Republic** has a fast-track residency-by-investment: investing around $200,000 in real estate or a business can make you eligible for immediate provisional residency, leading to citizenship after a few years of residency (DR citizenship by naturalization requires a few years of residency rather than a direct program).
Tax incentives for new residents: Obtaining a second citizenship or residency can have tax planning benefits, depending on your situation. For example, a U.S. citizen who becomes a citizen of St. Kitts and decides to relocate there might take advantage of the fact St. Kitts has no personal income tax or capital gains tax – however, note that U.S. citizens are taxed on worldwide income regardless of where they live, until they renounce U.S. citizenship. Nonetheless, having a Caribbean domicile can be part of a broader strategy (some investors eventually do relinquish U.S. citizenship or at least want the option). Moreover, being a “tax resident” of a low-tax Caribbean country could potentially shield non-U.S. investors or retired executives from taxes in their original home country under certain circumstances. The upshot is that these programs are not only about a lifestyle passport or tropical living – they can form a strategic piece of one’s global wealth and mobility management.

When considering a citizenship or residency by investment program, it’s essential to weigh the costs and benefits. Government fees for CBI programs can be substantial (often tens of thousands of dollars on top of the property purchase price), and the properties tied to CBI are sometimes priced at a premium. However, the ability to resell after a holding period (typically 5 years) and still retain citizenship means the capital is not sunk forever. Many ultra-high-end investors view Caribbean real estate-linked passports as a two-for-one: an investment that may appreciate or generate rental yield, plus the security of a second home country and travel document. This trend has been a driving force in the luxury development scene across islands like Antigua, St. Kitts, and Grenada, where new resorts and residences are funded largely by CBI dollars. For U.S.-based investors who mostly prize the financial and lifestyle aspects, purely residency-focused programs like the Bahamas may be more appealing, since U.S. citizenship already grants excellent global mobility. In all cases, engaging professionals who specialize in these programs is advisable to navigate the legal requirements and to select sound real estate projects that hold long-term value beyond the passport incentive.

Comparing Key Caribbean Real Estate Markets: Bahamas, Barbados, Dominican Republic, St. Lucia, Grenada

Every Caribbean nation has its own mix of taxes, costs, and investor perks. Below, we summarize the five popular destinations featured in this article – highlighting what makes each unique from a real estate investment standpoint. This comparison can help prospective investors align their strategy with the locale that best fits their tax profile and investment goals.

Bahamas

Tax snapshot: No income tax, capital gains tax, or inheritance tax. The Bahamas generates revenue through VAT and property-related fees. Real estate transactions incur a 10% VAT on the sale price (commonly split between buyer and seller), and annual property tax ranges from 0.3% to 1% of value for foreign owners (with various exemptions for Bahamian citizens or certain Out Island properties).
Purchase costs: Buyers pay their half of VAT (5%) plus legal fees (~2%) and due diligence costs. Sellers pay the other 5% VAT and typically the agent commission (6%±). No alien license is needed for most purchases, although foreigners must register large acquisitions and rentals with authorities. Closing is relatively straightforward and quick.
Foreign ownership & repatriation: The Bahamas is very foreign-investor-friendly. Non-citizens enjoy freehold ownership and the legal process is in English common law. By registering the purchase with the Central Bank, investors can seamlessly repatriate funds in U.S. dollars upon resale. The Bahamian dollar’s 1:1 peg to USD means minimal currency risk or conversion hassle.
Incentives: Purchasing a high-end property can qualify one for permanent residency in the Bahamas, which is coveted for lifestyle and tax reasons. While the Bahamas has no citizenship-by-investment program, its no-tax regime often negates the need – many wealthy individuals effectively “live” in the Bahamas to legally minimize global taxes, all without giving up their original citizenship.
Ideal for: Those seeking a stable, ultra-low-tax environment with high-end amenities. The Bahamas is a top choice for luxury vacation homes and yachting enthusiasts, and it boasts a mature rental market for villas and condos. It’s considered a prime location for asset preservation thanks to its political stability and well-regulated financial system.

Barbados

Tax snapshot: Barbados has a more traditional tax structure: it imposes income tax (up to 28.5% for individuals), but notably no tax on capital gains for property sales. Rental income from property is taxed at an effective flat 15% (with withholding on non-residents). Annual property taxes are progressive but relatively low – the effective rate often under 0.5% of property value for luxury homes, thanks to exempt bands. VAT at 17.5% applies to goods and services (including some transaction costs like legal fees).
Purchase costs: Uniquely, the seller bears the transfer tax (2.5%) and stamp duty (1%) on a sale, so a buyer’s direct closing tax is minimal. A buyer mainly pays legal fees (1-2% + VAT) and any bank costs. There’s no foreign buyer license fee, but overseas purchasers must have Central Bank approval for the foreign currency used in the sale – your attorney typically handles this and ensures the funds are registered for future repatriation.
Foreign ownership & repatriation: Barbados imposes no special restrictions on foreign ownership; freehold title is secure. The key consideration is exchange control: you are guaranteed repatriation of your original investment in foreign currency, but large profits might be doled out over time (unless structured through an offshore vehicle). This hasn’t dissuaded foreign investment – Barbados has a long history of British, Canadian, and U.S. luxury home owners – but it requires some planning. The legal environment is top-notch, and the island’s land title registry and courts are well respected.
Incentives: Barbados does not offer citizenship by investment, focusing instead on attracting long-term residents and entrepreneurs. Special entry permits and renewable residency visas are available for significant investors, retirees, or businesspeople. The country also offers tax incentives for certain tourism and development projects, but these usually benefit developers rather than individual homebuyers. One benefit of Barbados’s extensive tax treaty network (due to its more complex tax system) is that savvy investors can sometimes structure holdings to take advantage of treaty benefits (for example, avoiding double taxation on Barbados-sourced income).
Ideal for: Investors who value a well-developed, sophisticated market with strong legal protections. Barbados appeals to those looking for a balanced environment – it’s not a pure tax haven, but taxes are moderate and come with the perks of excellent infrastructure, healthcare, and a cosmopolitan lifestyle. It’s particularly popular for luxury vacation homes and as a base for executives who may shuttle to North America and Europe.

Dominican Republic

Tax snapshot: The Dominican Republic has a broad tax regime more akin to larger countries. It charges income tax on local earnings (up to 25% for individuals, 27% for companies), including rental income, and notably it taxes capital gains on real estate sales at the normal income rates. There is a 3% property transfer tax on purchases, and an annual property tax of 1% on values above roughly $170,000 (properties below that are exempt). The DR also imposes a 18% VAT (ITBIS) on most goods and services, though real estate transactions themselves are exempt from VAT and use the transfer tax instead.
Purchase costs: Foreign buyers in the DR pay the one-time 3% transfer tax on the higher of the sale price or appraised value, plus legal fees (usually 1%–1.5%). Title insurance is optional. There’s no foreign license or permit required, which keeps transaction costs relatively simple. Real estate agent commissions (~5%–6%) are usually paid by the seller. Closing costs in the DR are among the lower end of the Caribbean spectrum, aside from the transfer tax.
Foreign ownership & repatriation: The DR is very open to foreign owners – property rights are constitutionally protected regardless of nationality. Repatriating funds is generally unencumbered: you can convert Dominican pesos to USD on the open market. The country has no capital controls; profits, dividends, or sale proceeds can be sent abroad freely once any due taxes are paid. The main risk to manage is exchange rate risk, as the Dominican peso floats (though it has been relatively stable, gradually depreciating at a manageable pace). In major resort areas many transactions and even rental contracts are done in USD, offering a natural currency hedge for investors.
Incentives: The Dominican government actively incentivizes tourism and retirement investment. Under Law 158 (Confotur), certain tourism-related real estate projects are granted up to 15-year exemptions from property tax, income tax on rentals, and even transfer tax. Many condo-hotels and resort developments in Punta Cana, Puerto Plata, etc., carry these incentives, meaning an investor in such a project could pay no property tax or income tax for a decade or more. The DR also has a retiree residency program that offers tax breaks (such as exemption on foreign pension income and on import taxes for relocating). While the DR doesn’t trade passports for investment outright, its path to citizenship via naturalization (after only 2 years of permanent residency in some cases) is one of the faster in the Americas – making it indirectly attractive for those seeking an alternate passport after a period of owning property and living there part-time.
Ideal for: Value-driven investors and those looking at active rental income. The DR’s large, diversified economy (the biggest tourism destination in the Caribbean) provides opportunities for both capital appreciation and yield. You’ll find everything from affordable condos to ultra-luxury estates. It’s an ideal market if you plan to operate income-generating property like vacation rentals, given the steady tourist flow and relatively low operating costs. Just be prepared for a bit more bureaucracy in areas like tax filing, and consider local partnerships or advisors if venturing into development – the DR rewards local know-how.

St. Lucia

Tax snapshot: St. Lucia combines elements of a tax haven with a traditional system. On one hand, it has no capital gains tax and relatively low property tax (0.25% on residential property value annually). On the other, it does levy income tax on local earnings (a progressive rate up to 30%). In practice, many foreign owners who simply hold a vacation home or investment property in St. Lucia pay very little tax – just the modest annual property tax and perhaps income tax if they rent it out. There is a 2% stamp duty on property purchases (paid by buyers) and a 10% stamp duty on property sales by foreign sellers (the “vendor’s tax” mentioned earlier). St. Lucia’s VAT is 12.5% but mainly affects goods and services, not real estate transactions themselves (apart from agents’ fees or legal services).
Purchase costs: A foreign buyer in St. Lucia will incur the 2% stamp duty, legal fees (~2–3%), and importantly the cost and effort of obtaining an Alien Landholding License if not a citizen. The license application and associated fees (which can total in the low-five figures USD) add to the initial cost and timeline. If one is buying via the Citizenship by Investment route, then the license isn’t needed, but the investor will be paying government contribution fees as part of that program instead. Overall transaction costs for foreigners can be on the higher side if you include the license, but straightforward if you’re already a citizen or investing through CBI. Real estate commissions (~5%) are normally paid by the seller in St. Lucia.
Foreign ownership & repatriation: Aside from the license formality, St. Lucia imposes no ongoing discrimination against foreign owners. Titles are freehold and secure. Repatriation of funds is unhindered – the St. Lucian currency (XCD) is stable and freely exchanged. When selling, a foreign owner will pay the 10% tax on the sale price, but can then convert and remit the remaining proceeds without restriction. St. Lucia’s legal system (based on civil law with common law influences) is well-regarded, and the country has modernized its land registry and investment laws in recent years to attract international buyers.
Incentives: As noted, St. Lucia offers a citizenship program for investors, which is a major incentive if a second passport is of value to you. The investment can be a qualifying property at $300k+, which you can resell after 5 years (the next buyer can’t use it for citizenship again, but you keep the passport). For those not interested in citizenship, St. Lucia still provides an inviting lifestyle incentive – it has a burgeoning luxury tourism market, and the government has been investing in infrastructure and offering tax breaks to high-end hotel and villa developments. Investors may find opportunities to partner in these developments or benefit from government concessions indirectly (like buying into resorts that have corporate tax holidays or duty exemptions on building materials).
Ideal for: Boutique investors and lifestyle-driven buyers. St. Lucia is often chosen by those who want a mix of idyllic scenery (the island is stunningly beautiful, with its famous Piton mountains and dive sites) and a friendly investment climate. It’s perfect for a secluded vacation retreat or a small-scale development project catering to luxury eco-tourism. The market is not as large or liquid as some others (like the Bahamas or DR), but it offers uniqueness – an investor can truly shape a niche project here. Also, for global citizens seeking a Plan B, St. Lucia’s CBI is one of the more affordable routes to a quality passport, making it a strategic choice to bundle investment and citizenship together.

Grenada

Tax snapshot: Grenada is known for its no-tax regime on foreign income and no capital gains tax. It does levy income tax on locally earned income (same rates for residents and non-residents: 10% on the first EC$24,000, then 28% on the rest), but many offshore investors won’t trigger this except through rental income or local business operations. Property owners pay an annual property tax which is modest – up to 0.8% of market value, with lower rates for residential and agricultural use. On a sale, a foreign seller pays a 15% transfer tax (vs 5% if the seller is a citizen) as we discussed. There’s also a 5% stamp duty on property transfers, typically borne by the buyer in practice. Notably, Grenada has no inheritance or estate tax, adding to its appeal for legacy planning.
Purchase costs: For a foreign buyer, Grenada’s major extra cost is the Alien Landholding License at 10% of property value (unless you gain citizenship). Add to that around 1-2% for legal fees, and roughly 5% for stamp duty (which might be split with the seller via negotiation, but by law the buyer is often accountable for stamp duty). If the property is being bought via the citizenship program, then the license fee is waived (citizens don’t need it), but you’ll be paying the government’s CBI fees and donation in addition to the property price. The real estate market in Grenada often builds those CBI costs into the property pricing for approved projects. In non-CBI transactions, it’s important to factor the 10% license and 5% stamp – a $1 million purchase could have $150k in purchase taxes for a foreigner. Sometimes developers offer to cover some of these costs as a sales incentive, so it’s worth negotiating.
Foreign ownership & repatriation: Grenada is very welcoming, aside from the license requirement. Once you own the property, there’s no distinction in rights – you can even lease it out or develop it subject to the same regulations as locals. Getting money out of Grenada is straightforward: the XCD currency’s stability and the absence of exchange controls mean you can convert sale proceeds (which might even be in USD if sold to another foreigner) easily. Grenadian banks have correspondent relationships with U.S. and global banks, so wiring out your funds is routine after sale. It’s recommended to ensure all your tax dues (the 15% transfer tax if applicable, etc.) are paid, as a tax clearance certificate may be needed to register the sale and transfer funds.
Incentives: Grenada’s Citizenship by Investment program is a big draw. It not only grants a passport with desirable travel privileges (including China and the ability to apply for a U.S. E-2 visa, uniquely among CBI countries), but also can make real estate investment more cost-effective by saving the 10% alien license fee. Grenada also has an active push to attract luxury eco-tourism and yacht tourism – investments in certain sectors might come with government support or public-private partnership opportunities. For instance, an investor developing a boutique hotel might get import duty waivers or a corporate tax holiday. As with many islands, to truly reap some incentives one might have to move beyond just buying a villa and into the realm of development or business operation, but the options are there.
Ideal for: Forward-thinking investors looking for dual benefits – solid property investment and a strategic passport. Grenada is increasingly on the radar of international entrepreneurs and retirees who want the flexibility that its citizenship provides. Real estate-wise, it’s ideal for those interested in emerging markets: Grenada’s property values (outside of a few prime spots) are often lower than more developed islands, giving potential for growth. It’s also a haven for those who prefer a quieter, under-the-radar locale with upscale potential – think secluded luxury resorts, or developing an intimate villa compound for rental to high-end clientele (the island’s natural beauty and famous sailing waters provide the backdrop).

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In conclusion, understanding real estate taxes and costs in the Caribbean is about appreciating the nuanced differences between each island nation’s laws and opportunities. A seasoned investor approaches the region not as a monolith, but as a diverse portfolio of potential markets – each with its own fiscal landscape and strategic advantages. Whether your priority is maximizing after-tax yield, safeguarding wealth, obtaining a second citizenship, or simply enjoying a slice of paradise, there is likely a Caribbean locale suited to your needs. By staying informed (as with this comprehensive overview) and partnering with expert advisors on the ground, U.S. investors, brokers, and executives can confidently navigate the Caribbean real estate scene. The end result can be extremely rewarding: not just in financial returns, but in the enduring value of owning property in one of the world’s most desirable regions.