As an Attorney practicing Real Estate Law, I was pleasantly surprised by the Revenue Measures for the 2019/20 fiscal year announced by Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke on March 7,2019.
My article this week will look explicitly at the imminent changes regarding the reduction in fees for stamp duty and transfer taxes, that are slated to take effect as of April 1, 2019. To reiterate, the following are the proposed adjustments:
- Stamp duty, which was previously assessed ad valorem(as a percentage) at a rate of 2% for the buyer and 2% for the seller (a total of 4% per transaction) will now be reduced to a flat fee of $5,000.
- Transfer tax, which is borne by the seller, was previously assessed at a rate of 5% has now beenreduced to 2%.
To illustrate the savings for the Seller and Purchaser, let’s use a hypothetical Agreement for Sale, for a property valued at $12 million dollars.
Before April 1,2019:
Transfer tax (payable by seller): $600,000 jmd
Stamp Duty (payable by seller): $240,000 jmd
Stamp Duty (payable by purchaser): $240,000 jmd
As of April 1,2019:
Transfer tax (payable by seller): $ 240,000 jmd
Stamp Duty (payable by seller): $2,500 jmd
Stamp Duty (payable by purchaser): $ 2,500 jmd
The seller will save the most in the transaction, as a result of the changes to these fees. In this scenario about $597,500 less will be paid by the seller for these two fees. The buyer will save the difference in the stamp duty of $237,500.
It is important to note that Stamp Duty and Transfer Tax are not the only fees to be considered in the purchase of property. Other fees include:
- Real Estate Agent Fees
- Attorney’s Fees
- Preparation of Sales Agreement
- Registration Fee
It is a good time for the real estate industry as we anticipate savings for both the Purchaser and Vendor.
Abi-Gaye White-Thomas B.A., LL.B (Hons)