Rental Income in Barbados: What Luxury Owners Can Expect

Key points

• Foreign owners can rent out their Barbados property. There are no restrictions on foreign owners earning rental income.
• The peak season runs from mid-December to April. Summer occupancy drops, especially on the West Coast.
• Professional management usually costs around 8 to 12 per cent of rental income for a self-managed home, more for full-service villa management.
• Rental income from Barbados property is taxable in Barbados. Non-residents are taxed on their Barbados income, and you may also need to report it at home.
• Not every development allows short lets. Check the rules before you buy.

Two ways to own a rental

Managed resort or condo-hotel ownership

You own the unit, use it for an agreed number of weeks, and the resort rents it the rest of the year, sharing the income with you. You have little to do, but less control over pricing and when you can use it. The Crane Private Residences and Pendry at Port Ferdinand are examples of resort-backed ownership.

Freehold with your own manager

You own the villa or apartment outright and appoint a property manager or villa rental agency. You keep control of rates, dates and staff, but you carry the costs and the decisions. This is how most homes in Sandy Lane, Royal Westmoreland, Apes Hill and St Peter’s Bay are rented.

Gross versus net: a simple example

Say you buy a West Coast apartment for US$2 million and it takes US$140,000 in bookings in a year. That’s a gross yield of 7 per cent. Take off management at 10 per cent (US$14,000), service charges, insurance, utilities, land tax, staff and maintenance, and your net could easily fall to US$80,000 to US$100,000, or 4 to 5 per cent. These figures are illustrative. Ask the seller for actual rental statements, not projections.

What drives rental income

• Beach access. Beachfront and walk-to-the-beach homes book first and at the highest rates.
• Management. A good manager can change your yield by two or three percentage points.
• Photos, reviews and repeat guests. Many top villas fill largely through repeat visitors.
• Your own use. Every week you use the home at Christmas or Easter is a peak week you’re not renting.
• Flights. Barbados has direct flights from the UK, the US East Coast and Canada, which supports demand.

Tax on rental income

Rental income from a Barbados property is taxed in Barbados at personal income tax rates after allowable expenses. There is no capital gains tax on property in Barbados when you sell. US owners must still report worldwide income to the IRS, Canadian owners to the CRA, and UK owners to HMRC, with credit usually available for Barbados tax paid. Some tourism properties may qualify for incentives under the Tourism Development Act. Get advice from a Barbados tax adviser before you buy, because the ownership structure affects the answer.

Before you buy a home to rent

• Ask for the last two or three years of rental statements and occupancy.
• Read the community’s rules on short lets.
• Check whether the home needs to be registered or approved for tourist rentals.
• Get a written quote from at least one property manager.
• Budget 1 to 3 per cent of the home’s value a year for maintenance, more for older homes.

Related guides

• Is Barbados property a good investment?
• The cost of buying property in Barbados
• Buying off-plan in Barbados

This is general information, not legal or tax advice. Confirm the details with your Barbados attorney and your tax adviser at home.