Tax Free Real Estate in the Cayman Islands

Currently, real estate sales in the Cayman Islands are at record numbers, both in the number, and in the values, of the properties being purchased.

Buyers are attracted to the Cayman Islands for our low crime rates, first world infrastructure with upmarket commercial and residential developments, modern education facilities and curriculums, first class healthcare, a world renown financial services centre with professional legal, accounting and banking services available together with a wide range of sporting and other entertainment activities including some of the best diving and snorkeling in the world, quality local and international restaurants, theatres, clubs, bars and other nightlife and the benefits of living in the sea, sand and sun. The Cayman Islands is arguably the most popular place to live, work and invest in the Caribbean.

Many buyers are happy to learn that there is no annual property tax on their real estate purchases. There is however stamp duty (tax) of 7.5% of the value of the property payable upon purchasing a property in Cayman. Most people take this one-off tax in stride and proceed with their property purchases, however a few are reluctant to pay this sum and seek ways to reduce the sum payable to Government as stamp duty. One way to do this is to ensure that an accurate list of the contents (called chattels) included in the sale of a developed property is made and accurate (realistic) values added to them. Stamp duty is only payable on the value of the real estate and buildings including its fixtures and fitting; however stamp duty is not payable on furniture and appliances included with the sale.

Recently, this writer was told by a potential client that he had heard that it is possible to avoid stamp duty by purchasing the shares of a company which owns real estate, as the shares in the land holding company are transferred to the buyer, however the company remains the registered owner of the property. Enter the Land Holding Companies Share Transfer Tax Act (2022 Revision)! The LHCSTT Act specifically states that a return must be filed with the Ministry of Finance within 31 days of the transfer of any shares in a land holding company and a declaration made of the sum payable under the LHCSTT Act on the market value of the real estate owned by the company. The payment must be enclosed.

Sorry folks, there is no escaping the 7.5% tax on real estate purchases in Cayman. Thereafter, your real estate investment is tax free!