Developing Property For Sale In Trinidad and Tobago – Tax Exemptions

Developing Property For Sale In Trinidad and Tobago – Tax Exemptions

There are some serious tax benefits for property developers creating residential property for sale in Trinidad, new urban neighbourhoods and selling land for residential purposes in Trinidad and Tobago. In this blog, we try to cover all the tax benefits related to residential property development in Trinidad and Tobago. Two main types of tax exemption can be granted to residential land developers, and some even to residential property developers – Income Tax Exemption and Stamp Duty Exemption.

1.)Residential Land Developers Tax Exemptions Include:

According to the Income Tax Act Section 45C “there shall be exempt from income tax until the year ending 31st December, 2025, the gains and profits derived from the initial sale of residential house site, being part of a land development project”.

This means if you are developing residential land property for sale in Trinidad and Tobago, you may qualify for tax exemptions on income tax and capital gains.

INCOME TAX (also known as Value Added Tax)

Property Income Tax in Trinidad and Tobago is applied at a rate of 25%. This rate is applied to the property’s overall net income which is calculated by subtracting all the property’s operating expenses from the rental income of the property. If the property has an outstanding loan to repay, or left over depreciation allowance, then the interest payment of the loan plus 10% of the left over depreciation allowance per year can also be deducted from the net income before applying the overall tax rate to the final net income of the property.

To be understand how a mortgage can increase property returns by alleviating the tax expenses please do check this article: How-can-a-mortgage-affect-your-investment-returns which shows how long term mortgages can greatly reduce property tax at the early years of all property developments.

Income taxes are applicable to any type of property that is being used to generate income (rental income, leased land etc.)
Tip: In some parts of Trinidad and Tobago, for example in Port of Spain, car parks are not taxed by authorities and can allow an investor to generate tax free income!

Capital Gains Tax

Capital gains tax is a tax on the profit you make when you sell an asset or property. This means that if you purchase a property for $5,000,000 and sell it for $6,000,000 then the taxable amount would be applied to the $1,000,000 monetary gain you make on your investment. In Trinidad and Tobago, the capital gains tax rate is 25% on the monetary gains you make from the investment and is only applicable if a property is purchased and sold within a 12 month period.

If you purchase and sell a property in a period that is greater than 1 year, then there is no capital gains tax rate applied to the property, however if you were accounting for wear and tear (depreciation) and using this to reduce your income tax expense on the property, then all the wear and tear allowance that was used for the entire life of the property’s investment must be repaid back to the tax authorities.

But Wait, Not all Land Developers Are Eligible?

According to Housing.Gov.TT ‘A Certificate may be issued to persons for projects that satisfy the following criteria’ and the criteria is quite specific, so in order to benefit from the tax exemption, your land development and end product which is the actual land property for sale in Trinidad and Tobago must fit all the following criteria:

-The project must have commenced on or after 1st October 2012;

-The proceeds of the first sale of a residential house site in the land development project were received on or before 31st December, 2025

-The project has satisfied the requirements for development planning standards from Town and Country, Civil Works, Electrics and WASA Permits.

-The development project is not less than 1 acre for residential purposes.

-Each property or lot for sale in the development site is a parcel of land not less than 5,000 square feet that has been approved for residential purposes.

2.)Residential Land and Property Stamp Duty Tax Exemptions Include:

Also note, The sale or disposal of residential land valued at $450,000 or less shall be EXEMPT from Stamp Duty. So if you are developing affordable land, stamp duty taxes could also be exempted if each parcel is selling below $450,000 TTD – Click Here Read More on Stamp Duties on Property For Sale In Trinidad and Tobago
Please also note that Residential Property Developers Selling Dwellings/Houses to First Time Home Owners can also benefit from stamp duty exemption.

Developers that are building residential dwellings, houses and units for sale in Trinidad and Tobago can also avoid stamp duties in some cases when selling homes they develop to first time home owners.

According to the The Stamp Duty Act, Chap 76:01 – Stamp Duty for Residential Properties. Effective January 01, 2021, the stamp duty exemption applicable to first time homeowners on the transfer on sale of a house or dwelling that is used for residential purposes of up to $2M TTD

NB: This blog is not legal advice. You should consult a local legal adviser if you have any problems or concerns regarding your land and property taxes in Trinidad and Tobago.
Knowledge is power and at Propsnoop we take pride in furnishing our clients with all the information they need to plan appropriately, budget smartly, and act swiftly. That being said, whether you have decided to maneuver the process of buying or selling on your own, or with the assistance of a registered real estate agent, we hope this article answers any questions you might have about stamp duty fees.

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