Vacation property buyers benefit from big tax breaks

Bermuda visitors interested in vacation ownership can get a five-­figure tax break from the Government when they buy, thanks to recently passed legislation.

Savings can be between $30,000 and $54,000 on a property of $300,000.

“Absolutely, I was a major supporter of it,” said The Reefs Club developer David Dodwell when asked if he welcomed the new legislation.

“I complimented the Government for doing it. It was the right thing at the right time.”

According to the legislation, the waived fees and taxes amount to between 10 and 18 per cent of the purchase price.

It requires that the units be leased back to the hotel for transient visitors when the owner is not in residence.

The legislation is designed to stimulate the market at a time when real estate is cooling or depressed worldwide.

It also gives some international corporations with operations in Bermuda permission to buy vacation ownership properties. This is a significant shift in long-held public policy.

It is good news for vacation property developers who have created huge inventory on fractional units in recent years and need increased demand to match. Although Mr. Dodwell is confident the legislation can make a difference, he believes the proof isn’t in just yet.

He said: “We didn’t do any promotion until October and it came at the end of the high season — not so many customers in the house and that sort of thing.

“But we definitely featured it because anything that takes us from one tax level to another is a benefit and allows us to be competitive (with other destinations).” Although fractional units currently remain on the market unsold, more inventory is going through the planning process for Park Hyatt in St. George’s, Lantana in Somerset and Monroe Beaches in Southampton.