If your property will be up for sale after April 1, 2019, you stand to gain a savings of 3 percent in transfer tax more than if you closed before April 1, 2019. This is no April Fool’s joke. It’s an edict, a giveaway, a bonanza—call it what you will—from the government of Jamaica. At the time of writing, sellers now pay a transfer tax of 5 percent of the sale price of a property. After April 1 the tax will fall to 2 percent. Therefore, if you are selling your property for, say, $25 million, instead of paying the government $1.25 million in transfer tax you will only pay $500,000 after April 1. A substantial savings, indeed. What will you do with your transfer tax bonanza?
What Is a Transfer Tax?
Transfer tax is a tax that some cities, states or provinces levy mainly on real estate sales transactions. The percentage and target vary between jurisdictions. For example, some jurisdictions levy the tax on the seller, while others levy the tax on the buyer.
Barbados levies a 2.5 percent tax on the seller. Ghana’s transfer tax ranges from 0.25 percent to 1 percent, and the buyer pays. In the Cayman Islands, there is a 7.5 percent levy on the buyer. Argentina charges 3–5 percent to both seller and buyer, while Ontario, Canada, offers a mixture of rebates and a tax, up to 2.5 percent on the buyer. In New Zealand, no transfer tax exists.
What to Do with Your Transfer Tax Savings
If you plan on selling your house or strata soon, here are some of my suggestions for spending the 3 percent savings you will reap. Fix up and decorate the property first. That will almost certainly increase its value. Why not throw in a free dishwasher or some other new kitchen appliance with the sale? It’s a gimmick, yes, but it will certainly get the attention. Another idea: put the savings toward the next real estate investment you choose to embark on. If none of these suggestions tickle your fancy, treat yourself and your family to a well-deserved vacation. What the heck!
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