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Property Fund
Why real estate is an attractive investment?
A typical real estate investment (other than undeveloped or “raw” land) offers a total return, which consists of both an income element and capital appreciation. A typical commercial rental property is similar in some respects to a bond investment in that net cash flows are fixed for lease terms and are based largely on current interest rates and the capital cost of property. The unique difference is that the income payments will usually be much higher than a bond because of the liquidity risk of the property and the fact that rental incomes normally will increase in value over time. These two unique characteristics make the returns on real estate closer to those of equities by offering potential for growth, whereas most bonds have a principal component that does not appreciate and a fixed coupon, which does not change with inflation.
The Investment Strategy
The investment of the Fund will be directed towards properties, which provide sound income returns and/or potential for medium or long term capital appreciation. These may include land, office and retail space, luxury villas or smaller residential developments. The Fund may also partner with development funds or companies, which are considered to have significant capital growth potential. In addition, the Fund may also invest in marketable securities such as equities and government bonds, both locally and internationally.
Taxation of the fund
The Fund is not subject to corporation tax on the income or profits derived from its investments, provided it designates all of such income or profits arising in an income year to be income of the shareholders.
Capital gains
There is no capital gains tax in Barbados and therefore, capital gains realised by the Fund are not subject to tax.
Dividends
The Fund is exempt from tax in respect of dividends received from investments in companies located in countries within the Caribbean Community (CARICOM), which have ratified the CARICOM Double Taxation Agreement.
TAXATION OF SHAREHOLDERS
Property Transfer Tax and Stamp Duty
Investors in the Fund will be exempt from property transfer tax and stamp duty in respect of transfers of their shares in the Fund.
Dividends
Dividends paid by the Fund to individuals who are residents of Barbados will be subject to a final withholding tax of 12.5%. Dividends paid by the fund to a company that is resident in Barbados is not subject to taxation and those paid to a resident of a CARICOM territory which has signed the CARICOM Double Taxation Agreement are taxed at zero percent.
Residents of countries outside of CARICOM are subject to a 15% withholding tax.
Capital gains
There is no capital gains tax in Barbados.
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