Buying a property in a foreign country can be a daunting process. The unknown costs of buying a home, and the carrying costs of that home should be taken into consideration before buying, but it’s not always easy information to find. Let’s take a look at these costs, and what you can expect should you decide to buy your own little piece of paradise in the Turks and Caicos Islands.
The Costs of Buying a Home in Turks and Caicos
The first and most obvious cost is the sticker price of the property. Working with a quality realtor who knows the market and what you should be paying for that property is key. Finding recent or comparable sales can be difficult, so getting good value will require a professional.
If you are paying for the property outright (good for you!), this will save you significant costs on your new property. Financing costs are significantly higher in the TCI than they are in the US, Canada or the UK. Mortgage rates are higher, there is stamp duty on the financing, legal fees etc. If you need a mortgage, and we will base this on private financing due to the difficulties arranging bank financing locally, you can expect the following costs:
- legal fees of 1% of the mortgage amount (minimum)
- 1% of the mortgage amount in stamp duty
- 2% of the mortgage amount in lender/broker fees
- $700-1500 in appraisal fees (if required)
- Interest rates of 8% and up (depending on type of purchase)
Regardless of whether you would like to finance your property or not, you will also have stamp duty on the property. These costs are broken down as such:
- 6.5% = between $25k and $250k
- 8% = between $250k and $500k
- 10% = over $500k
This may seem like a hefty fee, however keep in mind, there are no property taxes in the TCI. Stamp duty is like paying all of your property taxes upfront rather than yearly, and generally will be a savings if you keep the property over a long period of time.
The Carrying Costs of your TCI Property
The costs of ownership can vary quite significantly depending on what you use the property for, and the type of property you purchase. If you decide to rent your property out short term, you may need a property manager who takes a percentage of the rental income, however most clients today still manage to make money on their property.
If you don’t rent your property out, your biggest costs will be the following:
- mortgage payments
- strata fees
- power bills (these can be fairly high on the island)
- property maintenance (ie pool, landscaping etc)
- hurricane insurance
There may be a few surprises in terms of cost, but nothing that should be too big of a deterrent. Owning a property in the Turks and Caicos is a very rewarding experience, and well worth the extra cost you may have here over other Caribbean islands.
