Buying or selling a home involves a lot of things, it also raises questions. In this column ‘Ask Bob’, real estate expert/broker Bob Bartikoski of RE/MAX Paradise Homes Bonaire answers a real estate question from a reader. This time:
Question: I know that if I buy a house or a lot, I pay 5% transfer tax on the purchase price. If I buy a lot and build on it, do I have to pay 5% on the home I build?
That’s a great question. You won't pay transfer tax on the cost of the new construction, but you will pay indirectly ABB (sales) tax, on all of the building materials and labor used to build your house. This tax is collected on a variety of ways.
If you go to your local building supply store, you don’t pay ABB when you check out, because the importers of those building materials, like doors, windows and kitchen cabinets have already been charged an import duty/tax when those materials arrived on Bonaire. The amount of ABB varies with the product or service being imported, but it is 8% for most items.
You will also pay the ABB on locally produced construction materials like construction blocks, concrete and gravel.
Your builder/contractor will charge you sales tax in the services he provides to build your house like the work from electricians, plumbers, plasterers, laborers and so on.
When you pay an invoice for a service such as gardening or plumbing, it also includes a 6% ABB tax, which the service provider pays to the tax office.
The tax is collected by the producer or service provider who is then responsible for paying that tax to the government tax office.
There are many variables in ABB tax, so for more detailed information consult the tax office and talk to your builder about costs.
Thank you for the question.
Do you want to buy or sell a house in Bonaire, or do have a real estate question for Bob? email him at: [email protected]. Call for free from the US: 1-866-611-7362 or Bonaire: +599-717-7362. See all our listings here.