Ministry of Finance: Condo and Homeowners’ Association Fees Subject to VAT

Posted on: October 14, 2014

Authored by: Ministry of Finance
Source: Ministry of Finance
Date: October 14, 2014

Amid increasing enquiries the Ministry of Finance explained today that maintenance fees for condominium and homeowners’ associations will be subject to VAT if the annual billings exceed the mandatory registration threshold of $100,000.  For some associations this threshold may not be reached until property insurance services become VATable in July 2015.  In such cases, mandatory registration would be put off for 6 months.  The Ministry however encourages associations in this second category to register initially on a voluntary basis so that transparent billing practices can be followed from the outset.

An important advantage of registration is that condominium and home owners association would be able to issue VAT invoices to VAT registrants who use such properties as vacation rentals.

While homeowner associations operate on a non-profit basis, their services are of a cost recovery nature, just like common area maintenance charges on commercial rentals and leases. A spokesperson for the Ministry of Finance explained that “because of this, many associations will see little difference between the adjustment in maintenance fees billed and the change in VAT inclusive expenses charged to them by service providers.  In these cases, the collection of VAT from homeowners, will match very closely the input credits that associations would be able to claim.  There is no upside revenue potential for the Government.”

Associations could find however, that there is net revenue that must be paid to the government, if they directly employ a significant number of staff to provide homeowner services.

Unlike for profit operations, a business licence fee will not be imposed on homeowner associations.  However, residential real estate held as an asset for investment/commercial purposes may be subject to business licence fees and VAT when used as vacation rentals. 

The Ministry advises that the online system for VAT registration began on October 13.  Applications for mandatory registration must be filed by November 30, 2014.

All News

Real Property Tax Notice of Assessment 2020

In accordance with the Real Property Tax Act, Chapter 375 as amended, the Chief Valuation Officer has hereby given the 2020 RPT Notice Click the link below to see the Real Property Tax Notice 2020.  

Advisory Regarding VAT Payments on Insurance Claims

Department of Inland Revenue’s Advisory regarding VAT Payments on Insurance Claims The Department of Inland Revenue advises the general public that VAT is not charged on insurance claims. Click link below for full press release Press Release – VAT on Insurance

VAT Filing Extension & Business Licence Suspension (Abaco & Grand Bahama)

In the aftermath of Hurricane Dorian, The Department of Inland Revenue wishes to advise all VAT registrants operating businesses on Abaco, the Abaco Cays and/or Grand Bahama that the filing of VAT returns due September 21, 2019 and October 21, 2019 have now been extended until November 30, 2019; for businesses requiring an extension. Click the link below for full…

New Year to bring several ‘ease of doing business’ reforms for starting a new business

The Ministry of Finance will roll out a provisional business license in the New Year to significantly reduce the time it takes to start a new business. This addition was approved by Parliament during the 2018/2019 budget exercise, and will be implemented by the Department of Inland Revenue in the first quarter of 2019. Click…

Inland Revenue Open on Saturdays in January

The Department of Inland Revenue is opening its Client Services Centre on Saturdays for the month of January to support businesses applying for business licence renewals. Click the link below for the full Press Release Press Release – Inland Revenue open on Saturdays in January