Freeport, Bahamas Short-Term Rental Regulation: A Guide For Airbnb Hosts

What are Short-Term Rental (Airbnb, VRBO) Regulations in Freeport, Bahamas?

The short-term rental market, including rental booking platforms like Airbnb and VRBO, has been growing in popularity in the Bahamas, including in Freeport on the island of Grand Bahama. However, property owners looking to start a short-term rental business need to be aware of the various regulations and requirements.

Starting a Short-Term Rental Business in Freeport

Ever since March 1, 2023, all property owners operating short-term vacation rentals in the Bahamas are required to register their properties through a new government portal. There are no associated business license fees to encourage compliance.

To register, owners must provide details like their name, property location, real property tax assessment number, and other relevant information. Successful registrants will then be eligible for various funding sources for medium-sized enterprises.

In addition to registration, short-term rentals in Freeport must meet certain building codes and zoning requirements. Buildings must qualify for an occupancy certificate and meet sanitation standards in accordance with the Environmental Health Services Act, Health Rules, Fire Services codes, and Building Control requirements.

There are also specific furnishing and amenity requirements for guest bedrooms, bathrooms, and common areas outlined in government guidance documents. For example, bedrooms should include basic furniture, TVs, safes, and internet access. Properties with pools must meet safety standards like having depth markers, exit ladders, and clean water.

Freeport has additional local ordinances regulating short-term rentals, similar to other tourist destinations in the Bahamas. These include limiting the density of rentals to one every 200 feet, requiring specific use permits, prohibiting street parking, and mandating the posting of licenses and rules.

Owners should be aware of the potential risks as well. As one Reddit user noted, hurricanes can pose a threat and owners need to understand they could lose their investment in a major storm. Having proper insurance is important.

Overall, while the short-term rental market can be lucrative in the Bahamas, with some owners able to cover their mortgage with just 14-20 weeks of bookings per year, it's critical to understand and follow all the legal requirements. Working with a trusted local property manager is also advisable for owners not based in the Bahamas full-time.

Short-Term Rental Licensing Requirements in Freeport, Bahamas

Based on the Freeport Bye-laws Act, short-term rental owners in Freeport must meet building construction, sanitation, and hygiene standards. Specific licensing requirements include:

• Obtaining a business license and paying the associated fee
• Registering the property on the government's short-term rental portal
• Meeting building code requirements and obtaining an occupancy certificate
• Adhering to health and sanitation standards
• Furnishing the property according to guidance on bedrooms, bathrooms, common areas
• Maintaining pools to safety standards
• Collecting and remitting 7.5% VAT on rental rates and services

License applications can be submitted online via the Department of Inland Revenue's business license portal. There is no fee for short-term rental registration for the remainder of 2024, but standard business license fees apply. The approval process typically takes 7 business days.

Failure to obtain proper licensing for a short-term rental could result in fines and penalties. Operating without a valid business license in the Bahamas is an offense.

Required Documents for Freeport, Bahamas Short-Term Rentals

To register a short-term rental property in Freeport, owners must submit the following documents:

1. Proof of property ownership, such as a title deed or conveyance. This establishes legal ownership.
2. Real Property Tax assessment number, to show the property is properly declared and assessed for tax purposes.
3. Occupancy certificate from the Ministry of Works, confirming the building meets construction and safety codes.
4. Health and sanitation inspection report from the Department of Environmental Health, verifying compliance with hygiene standards.
5. Fire safety inspection report from the Royal Bahamas Police Fire Services, certifying fire code compliance.
6. Detailed property information, including address, number of bedrooms/bathrooms, amenities, etc. for the rental listing.
7. Valid government-issued photo ID of the property owner, to verify identity.
8. Business license application and fee payment, submitted through the online portal.

These documents are typically obtained from the relevant government agencies, such as the Registrar General's Department, Ministry of Works, Department of Environmental Health, Fire Services, and Department of Inland Revenue. Some may require scheduling inspections and/or paying fees.

Assembling the required documentation helps ensure short-term rentals are operating legally, safely, and in line with quality standards. The registration and licensing process aims to professionalize the vacation rental industry.

Freeport, Bahamas Short-Term Rental Taxes

Short-term rental operators in Freeport must collect and remit the following taxes:

Value Added Tax (VAT): A 7.5% VAT applies to the total rental rate, including cleaning fees and other charges. This tax is collected from the guest and remitted to the government monthly via VAT filings.

Business License Fee: Short-term rental owners must pay an annual business license fee. The amount varies based on rental revenue but starts at $100 for revenues under $50,000. This is a tax-deductible expense.

Depending on their business structure, short-term rental operators may also be subject to:

Business Income Tax: Rental profits may be subject to business income tax, with rates ranging from 0% to 18% based on income levels. Many expenses are deductible.

National Insurance Contributions: If the rental business has employees, the owner must register with NIB and pay contributions for workers.

Some common tax deductions for short-term rentals include:

1. Business license fees
2. Cleaning and maintenance costs
3. Insurance premiums
4. Interest on a rental property mortgage
5. Marketing and advertising expenses
6. Property management fees
7. Repairs and renovations
8. Utilities and internet costs

Owners should consult an accountant familiar with Bahamian tax laws to ensure they are meeting all obligations and claiming eligible deductions. Proper record-keeping is essential.

Bahamas Wide Short-Term Rental Rules

The Bahamas government has recently implemented new regulations and requirements for short-term vacation rentals throughout the country, which apply to Airbnb hosts in Freeport. Here are the key points to be aware of:

1. Registration Portal: As of March 1, 2023, all property owners operating short-term vacation rentals are required to register their properties in a newly launched government portal. Registration is currently free for the remainder of the year. While not legally mandated, the Department of Inland Revenue strongly encourages all short-term rental owners to register.
2. VAT Registration: Foreign owners of short-term vacation rentals must register for VAT regardless of their annual turnover amount. Bahamian individuals only need to register for VAT if their annual turnover exceeds $100,000. Bahamian companies must register for VAT if they meet or anticipate meeting the $100,000 annual threshold.
3. Business License: Foreign owners and Bahamian companies operating short-term rentals are required to obtain a Business License. Bahamian individuals do not need a Business License for short-term rentals.
4. Maximum Stay: Guests cannot stay at a single short-term rental property for more than 45 days at a time.
5. 12% VAT Rate: Short-term rentals are subject to a 12% VAT rate. The obligation to collect and remit the VAT lies with the property owner, but they can authorize platforms like Airbnb to collect it on their behalf.
6. Increased Enforcement: The government has indicated there will be a crackdown on illegal short-term rentals that are not properly registered, licensed, or collecting VAT as required.

Freeport Airbnb hosts should ensure they fully understand and comply with these national regulations, in addition to any Grand Bahama specific rules, to operate legally and avoid penalties. Consulting with local tax and legal professionals is advised.

Does Freeport Strictly Enforce STR Rules?

Based on discussions in online forums, Freeport appears to be relatively Airbnb-friendly compared to some other cities, with many hosts operating short-term rentals. However, with the Bahamas government's launch of the new registration portal and stated plans to crack down on illegal rentals, enforcement of the national rules is likely to increase in Freeport and across the country.

While some hosts may still attempt to skirt the regulations, the government has made it clear they intend to identify all 10,000+ short-term rentals in the Bahamas and ensure compliance. So operating "despite the rules" is not advisable and could result in penalties.

The smart approach for Freeport hosts is to properly register their properties, obtain a Business License if required, and follow all national short-term rental regulations to avoid issues. Consulting a local lawyer and tax professional is recommended to ensure full compliance.

How to Start a Short-Term Rental Business in Freeport, Bahamas

Starting an Airbnb or short-term rental business in Freeport can be a great opportunity, but it's important to follow the proper steps to ensure you comply with all regulations. Here's a numbered list of key steps to get started:

Register your property in the government's short-term rental portal

1. Go to the Department of Inland Revenue website at inlandrevenue.finance.gov.bs and click the "Vacation Rental" tab to access the registration portal.
2. Provide your name, property details, real property tax assessment number, and other requested information.
3. Registering is not legally mandated but strongly encouraged by the government.

Determine if you need a Business License

1. If your property operates under the Hawksbill Creek Agreement in Freeport, you are exempt from needing a Business License for short-term rentals.
2. Foreign owners and Bahamian companies must obtain a Business License.
3. Bahamian individuals do not need a Business License for short-term rentals.

Register for VAT if required

1. Foreign owners must register for VAT regardless of annual turnover amount.
2. Bahamian individuals and companies only need to register if annual turnover exceeds $100,000.
3. Short-term rentals are subject to a 12% VAT rate, which you must collect and remit to the government (or authorize a platform like Airbnb to collect on your behalf).

Ensure your property meets basic quality standards

1. Review the "Owner Occupied Rental Homes" basic requirements outlined by the Ministry of Tourism.
2. Key areas include adequately furnished and ventilated bedrooms, operable windows/doors, clean furniture and appliances, telephone access, and more.
3. An inspection may be conducted to verify compliance with health, safety, and building codes.

Create a compelling Airbnb listing

1. Take high-quality photos that showcase your property's best features.
2. Write an accurate, detailed description that highlights key amenities and selling points.
3. Be transparent about any quirks or limitations to manage guest expectations.
4. Research comparable Freeport listings to ensure your nightly rates are competitive.

Implement a system to manage bookings, communication, and turnovers

• Decide if you will manage all guest interactions yourself or hire a property manager.
• Use a platform like Airbnb or a channel manager to streamline booking and communication.
• Develop a reliable cleaning and turnover process so the property is ready for each new guest.
• Consider hiring a reputable cleaning service if you cannot handle turnovers yourself.

Consult with a local lawyer and tax professional

• Review all applicable laws and regulations with a Bahamian lawyer to ensure total compliance.
• Discuss your specific tax obligations with an accountant familiar with short-term rental rules.
• Determine if you should form a legal entity to operate your rental business for liability protection and tax advantages.

By following these steps and continuing to provide excellent hospitality for your guests, you can launch and grow a successful short-term rental business in Freeport. Just be sure to stay up-to-date on any regulatory changes and maintain compliance to avoid penalties as enforcement increases.

Who to Contact in Freeport, Bahamas about Short-Term Rental Regulations and Zoning?

If you have questions about short-term rental regulations or zoning in Freeport, here are the key government agencies and resources to contact:

Department of Inland Revenue - Freeport Office

• Address: Harold Degregory Building, West Atlantic Drive, Freeport, Grand Bahama, Bahamas
• Mailing Address: P.O. Box F-42512
• Phone: (242) 602-9127 or (242) 602-9128
• Email: taxinquiries@bahamas.gov.bs
• Contact the DIR for questions about registering your property, obtaining a Business License, and VAT obligations.

Grand Bahama Port Authority

• As Freeport properties fall under the Hawksbill Creek Agreement, the Port Authority handles business licensing and can advise on any zoning restrictions.
• Phone: (242) 350-9000
• Email: info@gbpa.com

Bahamas Ministry of Tourism - Grand Bahama Office

• Address: The Office of the Prime Minister, East Mall Drive, Freeport, Grand Bahama
• Phone: (242) 352-8044
• Email: tourism@bahamas.com
• Contact the Tourism office for guidance on quality standards for short-term rentals and promotion opportunities for registered properties.

In addition to government contacts, connecting with other short-term rental hosts can provide valuable insights and support. Here are some active online communities to check out:

Airbnb Community Center - Hosting Forum

• https://community.withairbnb.com/t5/Hosting/bd-p/listing-and-reservations
• Ask questions, share experiences, and learn hosting tips from Airbnb hosts worldwide.

AirHostsForum.com

• https://airhostsforum.com
• An active forum dedicated to connecting Airbnb hosts to discuss all aspects of short-term rental management and regulations.

/r/AirBnB Subreddit

• https://www.reddit.com/r/AirBnB/
• Reddit community for Airbnb hosts and guests to share information and advice.

While online forums can be great resources, always double-check any regulatory information with the official government contacts. Short-term rental hosts in Freeport are also encouraged to consult with local legal and tax professionals to ensure compliance with all applicable rules. With the Bahamas government increasing enforcement, it's critical to stay informed and properly register your short-term rental business.

What Do Airbnb Hosts in Freeport, Bahamas on Reddit and Bigger Pockets Think about Local Regulations?

Airbnb hosts and potential investors in Freeport, Bahamas have shared their experiences and opinions on various online platforms like Reddit and Bigger Pockets. Here are a few real-life experiences and stories from these forums:

Reddit User Discussions on r/bahamas

In a thread discussing general tips for tourists in the Bahamas, a user mentioned the importance of understanding local regulations and the impact of short-term rentals on the community. They emphasized the need for hosts to comply with national laws to avoid penalties and ensure a positive experience for both guests and locals.

Reddit Thread on Beach Living

A user in the r/financialindependence subreddit discussed the benefits of living in Freeport, highlighting the balance between affordability and quality of life. They noted that while Freeport is less crowded and expensive compared to other beach destinations, it’s crucial for hosts to stay updated on local regulations to maintain their rental business without legal issues.

Investing in Short-Term Rentals in the Bahamas and Caribbean

A user on Bigger Pockets shared their positive experience with the short-term rental market in the Bahamas. They found the market to be healthy and lucrative, especially for well-maintained properties. However, they also stressed the importance of adhering to local regulations, including registration and VAT compliance, to avoid complications.

Disclaimer: While we here at BNBCalc strive to keep all of our city regulation guides updated and accurate with all the latest local laws, we still do not suggest using them as your sole or primary source for local regulations. We also do not recommend you rely on the third-party sources we link to or reference, and we are not responsible for any of the information on these third-party sites. These guides are for entertainment purposes only and only provide basic information and should not be considered as legal advice.

We highly recommend directly contacting the responsible parties for each city and hearing what their officials have to say. Ultimately, it's your responsibility as an investor to ensure you fully comply with the local laws, and it's best to speak with professionals before making an investment decision.