T
he Minister of Finance and The Public
Service, Dr The Honourable Nigel Clarke,
in his Opening Budget Presentation in
the 2019/2020 Budget Debate, delivered in
the House of Representatives on March 7, 2019
and The Prime Minister, The Most Honourable
Andrew Holness, in his contribution, on March
19, 2019, announced arguably the most exciting
combination of changes, in decades, to the cost
of purchasing real estate, selling real estate,
borrowing on security of real estate and the
administration of estates.
The Changes
- Effective April 1, 2019, ad valorem Stamp Duty
payable on documents related to the transactions
listed above, pursuant to the Stamp Duty Act has
been replaced with fixed rates of Stamp Duty.
Ad valorem calculation of tax means that the
tax paid is in proportion to the value of the
asset in question. For example, prior to April 1,
2019, Stamp Duty on an Agreement for Sale was
calculated as a percentage of the value of the sale
and stood at four per centum (4%) of the agreed
sale price.
What Stamp Duty reform has allowed, is for the
wiping away of the percentage calculation of
Stamp Duty and an introduction of a flat rate
of Stamp Duty, dependent on the value of the
transaction.
The fixed fee is One Hundred Dollars ($100), per
document or property, relating to transactions
valued below Five Hundred Thousand Dollars
($500,000) and Five Thousand Dollars ($5,000) per
document or property, relating to transactions
valued at Five Hundred Thousand Dollars
($500,000) and more.Of note however, in relation to mortgages,
debentures, Bills of Sale and Assignments, Stamp
Duty will be the above fixed fee, plus twenty-
five per centum (25%), bringing the total to
Six Thousand Two Hundred and Fifty ($6,250)
for loans of Five Hundred Thousand Dollars
($500,000) and over and One Hundred and
Twenty-Five Dollars ($125) for loans under Five
Hundred Thousand Dollars ($500,000).- Effective April 1, 2019, Transfer Tax on the
transfer of property, during your lifetime, of any
asset falling within the definition of “property” in
the Transfer Tax Act, which includes real estate,
has been reduced from five per centum (5%) of
the market value of the asset to two per centum
(2%) of the market value of the asset.
This reduction is particularly significant to sellers
of real estate as Transfer Tax, is payable solely by
vendors. It is also significant to owners of real
estate wishing to make a gift of the real estate,
during their lifetime, as this means that there will
be a savings of three per centum (3%) of the value
of the real estate, on these types of transactions.THE TIME IS NOW
Attorney-at-Law, Gisele Gibson breaks
down the new real estate tax cuts
Photography by Andre Rattigan