The Legal Benefits of Investing in Property in the Cayman Islands

Here we will take a brief look at some of the legal benefits and what opportunities there are to make a return on your investment in the Cayman Island property, please consult a local attorney for more details.

Foreign investment in real estate is commonly achieved through the formation of local limited liability companies, foreign companies and trust arrangements. Types of ownership include, leasehold or strata titles and fee simple ownership.  Any, foreign company or Cayman company that is foreign controlled can own income producing real estate, although it must be licensed with the Trade and Business Licensing Law and the Local Companies (Control) Law.  There is currently no legislation permitting the creation of real estate investment trusts (REIT's) but corporate and individual trustees can be registered as the proprietor of the land, a lease or charge of immoveable property.  All, foreign corporate trustees must be registered as a foreign company with Companies Registry.  

Below are some of the main benefits of investment in Cayman Islands real estate market:

• The Cayman Islands is considered tax-neutral. There are no income, capital gains or inheritance taxes nor property tax.
• There are no variations in the real estate’s law across the Cayman Islands districts.
• There are no restrictions on foreign ownership of property when purchased for personal use.
• Ownership can be held in the name of one or more individuals or in a corporation. This does not reveal actual ownership.
• Investors can purchase land and in most cases, there are no obligations to develop it. As there are no annual taxes due, this can offer a simple way to grow your money to achieve Cayman Islands real estate investment returns.
• The Cayman Islands Land Registry has a sophisticated system where each property is assigned a unique block and parcel number. Buyers can view the records including past transactions and search for any restrictions or liens on the property.  
• For all registered absolute titles the Government guarantees the right of ownership.
• There is no requirement to pay taxes on income from leasing a property, which is good news for those looking for return on investment in Cayman Islands.
• Cayman Islands investments/purchase of property does not attract tax on the sale.

There is a onetime stamp duty which is calculated on the value and location of the property when you purchase the property.  The current rate is 7.5% but for Caymanians, there are some exceptions. The stamp duty authorities reserve the right to and sometimes do carry out their own Grand Cayman property appraisal. However, under normal circumstances the duty is paid based on the market value, ie a willing buyer and a willing seller, arm’s length transaction.

Stamp duty is payable and due within 45 days of the contract being signed. This includes:

• Transfer of land or strata title
• Transfer of a new lease
• A debenture or mortgage of land
• An agreement or memorandum of agreement for the purchase of land or strata title and the assignment of any rights under such an agreement.

Stamp duty is charged on any mortgage (legal or equitable) or charge of immovable property. This is currently 1% for property less than CI$300,000 and 1.5% on mortgages of CI$300,000 or higher. For the purchase of freehold or leasehold land it is paid by the buyer and for the grant of a lease by the tenant. For a lease agreement, stamp duty can be calculated from 5 to 20% of the aggregated or average rent dependent on the term of the lease.  

There are various types of stamp duty exemptions, such as for natural love and affection between families or if there is an ownership change and transfer of shares in a corporation owning real estate.  However, these are at the discretion of the Financial Secretary of the Cayman Islands and consult your is a local attorney for details.