Last Friday we received the much anticipated and welcome news that Premier Wayne Panton announced a plan to raise the stamp duty exemption for Caymanian first-time home buyers, which was approved by the Cabinet on September 18th, 2023.
Previously, the stamp duty exemption applied to residential properties valued up to $400,000 and to land valued up to $150,000 but now they have been increased to $550,000 and $250,000 respectively.
The Premier stated that where the property value of a residence is above $550,000 but less than $650,000, stamp duty will be assessed at 3.75% on the difference above $550,000. For land, where the value is above $250,000 but less than $350,000, stamp duty will be assessed at 3.75% on the difference above $250,000 only.[i]
Group purchases by Caymanians
The changes in the stamp duty exemptions also effected “groups” of Caymanians. A “group” is considered 2 to 10 people.
When purchasing their first home or developed residential property together, a Caymanian couple (or larger group) will not have to pay stamp duty on for an assessed value up to $600,000, which is a $100,000 increase. Where the property value is above $600,000 but less than $700,000, stamp duty will be assessed at 3.75% on the difference above $600,000.
With respect to land, a Caymanian couple (or larger group) will not have to pay stamp duty on their first parcel of land when it is valued at $450,000 or under. This was increased from the previous amount of $300,000. Where the property value is above $450,000 but less than $550,000, stamp duty will be assessed at 3.75% on the difference above $450,000.
Second property purchase
I believe that real estate, especially in the Cayman Islands, is a great financial investment. Due to our islands’ size, and as the population continues to grow, inventory will always remain limited. With limited inventory, as well as many other factors, property prices in the Cayman Islands will continue to increase. Therefore, a property purchased today will be at a higher price tomorrow and into the future.
Secondly, the ability to purchase a second property can also bring in substantial rental income today and in the future.
As a part of the stamp duty announcements made by Premier Panton, a reduced stamp duty fee will now be formalized for Caymanians purchasing their second property.
For a Caymanian purchasing their second home or developed residential property, stamp duty will be assessed at 3.75% on values up to $600,000. For a second parcel of raw land, stamp duty will be assessed at 3.75% on values up to $300,000.
For a group of 2 to 10 Caymanians purchasing a second home or developed residential property together, stamp duty will be assessed at 3.75% on values up to $700,000. For purchasing a second parcel of land together, stamp duty will be assessed at 3.75% on values up to $550,000.
It is not uncommon for changes to be talked about but then take months to be implemented. Therefore, it was extremely welcome news that the government announced not only these new changes, but that they are effective immediately. This is great news! As interest rates continue to rise, although not at the same rate we have been seeing in the past and property prices continue to increase, the best time to buy was yesterday, the next best time is now!
If you have any questions about these stamp duty changes or any real estate related questions, please do not hesitate to contact either myself or my team at +1 345 945 4000.
[i] Cayman Compass, September 25, 2023.