Home Transfers Within A Family Still Incur Taxes In Bermuda

• Published date: 01 March 2023
• Subject Matter: Real Estate and Construction, Tax, Family and Matrimonial, Real Estate, Tax Authorities, Wills/ Intestacy/ Estate Planning
• Law Firm: Appleby
• Author: Mr Neil Molyneux

Any home sale or transfer either by a live person or by inheritance typically attracts stamp duty.

Even if no money is paid, stamp duty is payable based on open market value and calculated on a sliding scale of up to seven per cent. If a home's open market value is $1 million and a half share is transferred (even for no money), stamp duty payable is $14,000.

Homeowners often want to add others to title for no payment; typically, a spouse or child over 18 years old. In the past, this typically reduced stamp duty payable on death (known as death tax).

Nowadays, inheriting spouses are exempt and the 'primary family homestead' concession exempts one home (and no more) of a Bermudian from death tax.

Non-Bermudians do not qualify for primary family homestead. Spouses of non-Bermudians are exempt from death tax, but still require a land license under the Immigration Act.

As primary family homestead only exempts one home, it can be tax efficient to transfer additional homes/property during a lifetime. Careful consideration and calculations are advised.

Typically, it is not tax efficient for a Bermudian homeowner, with only one home in Bermuda, to add anyone else to title. It may be tax efficient for a non-Bermudian to add others to title.

Stamp duty can be reduced if the transferring homeowner keeps a lifetime interest in the home. The reduction is based on the Tax Commissioner's lifespan actuarial table. The older the homeowner, the lesser the estimated life span, and so less tax reduction.

Property transfers from one estranged spouse to the other, if compliant, are only subject to stamp duty of $200 (plus the Tax Commissioner's fee of $202); rather than valuation-based stamp duty.

After death, a home designated as a primary family homestead is transferred to heirs free of death tax. A home can be registered as a primary homestead either before, or after, the owner's death.

However, if the deceased was Bermudian and owned more than one home or property at death and no property was registered for primary homestead, the least valuable qualifies to maximise the tax due.

A Bermudian can either apply directly to the Tax Commissioner's office for a...