US Buyers and Bahamas Real Estate: What to Discuss with Your Estate Attorney Before You Buy

1. What's actually true about Bahamas real estate and US tax

The Bahamas charges no income tax, no capital gains tax and no inheritance tax. Property owned in the Bahamas is not subject to Bahamian inheritance taxation when it passes to your heirs. That part is genuinely true and it is one of several reasons US buyers consider the jurisdiction.

What is also true: as a US citizen, none of those Bahamian rules change your obligations to the IRS. The United States taxes its citizens on worldwide income and on worldwide assets at death regardless of where they live or what they own. Owning property in the Bahamas does not by itself reduce your US federal estate tax exposure, your US federal income tax obligation, or your state-level tax exposure if you are domiciled in a state that imposes estate tax. The Bahamian buying process itself — the International Persons Landholding Act, the conveyancing flow, the closing costs and the residency overlay — is covered in the complete foreign buyer guide. This page is the US-side coordination layer that sits on top of it.

The 2026 numbers worth knowing as context for any conversation with your US estate attorney: under the One Big Beautiful Bill Act, the unified federal estate and gift tax exemption is $15 million per individual for 2026, indexed to inflation, with a top rate of 40% on amounts above the exemption. The annual gift tax exclusion remains $19,000 per recipient. Gifts to a non-US-citizen spouse are limited to $194,000 per year. Twelve states plus the District of Columbia impose their own estate or inheritance taxes, several with materially lower exemption thresholds than the federal level.

None of these are numbers Glenn can advise you on. They are anchor points so your conversation with your CPA starts from current facts rather than assumptions.

2. Why US buyers ask this question

Three reasons account for most of the US buyer enquiries I receive about wealth preservation and Bahamas property in 2026.

The federal exemption is now permanent — but federal isn't everything. The 2025 legislation made the $15 million federal exemption permanent rather than letting it sunset back to roughly $7 million. For most US households that removes the urgency around federal estate tax. For HNW estates above the threshold, the 40% rate above $15 million still matters significantly — and state-level exposure operates separately.

State-level exemptions are dramatically lower. A buyer domiciled in Massachusetts, Oregon, Washington or New York can be well below the federal threshold yet still face state estate tax exposure. Bahamas property doesn't directly address state tax — but for buyers contemplating relocation as part of broader planning, the state tax conversation often gets folded in.

HNW estates have grown. Real estate appreciation, equity portfolios and concentrated business stakes have pushed more US households into estate-tax-relevant territory. Buyers with $20M, $30M or $50M+ net worth are looking for asset diversification outside the US system, lifestyle bases in stable jurisdictions, and optionality — the "if circumstances change, what would I want to be in place" planning that good advisors do early.

Bahamas property genuinely fits one or more of those motivations for many buyers. It does not, by itself, solve the underlying US tax position. The point of this page is to help you separate the two and bring the right questions to the right advisor.

3. Four things to discuss with your US estate attorney before buying

The structuring decisions on a Bahamas purchase carry US tax consequences that long outlast the closing. The right time to coordinate with your US estate attorney is before contracts are signed — not after. Four conversations matter most.

(a) Ownership structure

Whether you hold Bahamas property in your personal name, through a Bahamian company, through a foreign or domestic trust, through a US LLC, or through some hybrid structure has US tax consequences that differ materially. Personal ownership is simplest but offers the least flexibility. Corporate ownership can address some objectives at the cost of others (US controlled foreign corporation rules, FBAR reporting, transfer pricing on rentals). Trust structures introduce gift-tax exposure on funding and ongoing reporting obligations under Forms 3520 and 3520-A. Each structure changes your US estate tax footprint in different ways. Have this conversation before the deed names are decided. Once title is registered, restructuring is expensive.

(b) State-level exposure

Federal estate tax is one layer. Twelve states plus DC impose their own estate taxes, and your domiciliary state determines whether and how Bahamas property enters that calculation. If you are a resident of a state with its own estate tax regime, ask specifically: how does my state treat Bahamas-situated assets in my estate, what does residency severance look like if I want to change domicile, and what timeline does the state apply to that severance. Many buyers pursuing Bahamas property as part of a relocation plan underestimate how sticky state domicile can be without proper planning.

(c) EPR coordination

Bahamas Economic Permanent Residency (EPR) is granted to foreign nationals who make a qualifying real estate investment of $1 million or more, with $1.5M+ qualifying for an accelerated priority track. Effective January 2025, the qualifying property must be held for at least 10 years. EPR provides lifetime Bahamian residency and a base for spending up to and beyond 90 cumulative days per year in the Bahamas. Critically, EPR does not by itself terminate US tax residency for US citizens. You can hold Bahamas EPR and remain fully subject to US worldwide taxation. The two questions — "should I pursue EPR" and "should I change my US tax position" — are separate, and should be discussed separately with your US tax adviser. Most US clients pursue EPR for lifestyle, mobility and asset diversification; some later combine it with renunciation planning, but the order matters significantly. The complete EPR guide is here; current EPR-qualifying inventory in Glenn's MLS portal is here.

(d) Renunciation considerations — never first

If renunciation of US citizenship is on the long-term table, the order of operations is critical. Under IRC section 877A, certain individuals classified as "covered expatriates" (based on net worth above $2 million, average annual US tax liability above an indexed threshold of $211,000 for 2026, or compliance test failures) face an exit tax that treats most worldwide assets as sold for fair market value the day before expatriation, with the first $910,000 of unrealised gain excluded for 2026 returns. Renunciation also triggers ongoing rules under IRC section 2801, including a flat 40% tax on covered gifts or bequests received by US persons from former citizens. The single most important rule: never renounce first. Coordinate with your US tax attorney, model exit-tax exposure, position assets in advance, then make the decision — if you make it at all. Many EPR holders never renounce and never need to.

4. Where Bahamas property genuinely fits in the wealth-preservation conversation

Set aside the marketing claims and look at what Bahamas real estate actually contributes to a sophisticated wealth-preservation strategy. Three roles, all real, none of them substitutes for proper US tax planning.

Asset diversification outside the US system. A meaningful holding in a stable, English-speaking, US-dollar-pegged jurisdiction 50 minutes from Florida provides genuine geographic and currency diversification. This isn't a tax strategy — it is a portfolio strategy that some HNW estates pursue for resilience reasons that have nothing to do with tax.

Optionality. Bahamas EPR provides the legal right to relocate at any future point. Owning a property and holding residency you may or may not exercise gives a family flexibility that is hard to value but increasingly valued. A buyer who wants the option to spend three months a year in the Bahamas, or who wants the option to relocate fully if circumstances change, gets real planning value from holding both the asset and the residency status — even if neither is exercised heavily in any given year.

Lifestyle base. A property used for personal enjoyment is the most undervalued category of "investment." A Bahamas condo or villa that the family genuinely uses for 8–12 weeks a year creates value that a comparable financial portfolio cannot. Combined with rental income during unused weeks, the carrying cost can be partially or fully offset. The dual-use condo guide covers that math in detail.

Each of these is a defensible reason to buy. None of them, individually or collectively, eliminates US estate tax exposure. The integrated strategy — where Bahamas property does what it does well, and US tax structuring is handled by qualified US advisors — is what good planning looks like.