Concessions on Stamp Duty for Caymanians buying their first home or land to build will increase in the new year.
The Cayman Government seeks to amend the Stamp Duty Law (2013 Revision) to primarily help first time Caymanian property buyers and low income members of the public.
The threshold before people pay the tax will be increased from $100,000 to $150,000 on land and from $300,000 to $400,000 on built property. Caymanians who are making their first property purchase as raw land that is over $150,000 but less than $200,000 will pay a reduced rate of only 2% stamp duty, and those able to purchase a building which is priced over $400,000 but less than $500,000 will also only pay 2% stamp duty.
The concession will also be available to two or more Caymanians, but not more than ten, that are buying property collectively for the first time. If the value of the property with a building on it does not exceed $500,000, then there is no stamp duty to pay, and if the couple or group is buying raw land with a value under $300,000, then there is again no stamp duty to pay. The bill also specifies a 2% rate of stamp duty for acquisitions with built-up property that do not exceed $600,000 and $350,000 for raw land.
Currently, the thresholds for concessions are $100,000 for purchase of raw land (land with no buildings on it) and $300,000 for purchase of apartments, condos or houses by first time Caymanian buyers.
Minister for Finance and Economic Development, Hon. Roy McTaggart explained, “We are willing to forego revenue to ensure that the financially disadvantaged, as well as young Caymanian families starting out in life, get a further break. This is also Government’s way of trying to help all lower-income persons in the Cayman Islands attain property ownership”.
The bill also closes a loophole that Government said some property developers were using to cut stamp duty charges. Increases in revenue that results from closing this loophole could be used for public infrastructure projects and other programs.
Explaining how the new bill also proposes to address the linked property transactions, he said that where the value of the property exceeds $300,000, those deals will now attract a 7.5% stamp duty levy. “We are closing the loophole whereby some property developers have sought to minimize stamp duty charges. The practice has resulted in a very material loss of revenue
due to government — revenue that we can invest in areas such as much-needed infrastructure projects, as well as social programmes to help the most vulnerable members of our community,” McTaggart added.
But even in the case of a linked property transaction, if the value of the property with a dwelling on it does not exceed $300,000, the stamp duty payable is only 3% for both Caymanians purchasing property at least for the second time and non-Caymanians.
For Caymanian first-time buyers in a linked property transaction, with the purchase price not exceeding $300,000, the First-Time Caymanian Property Ownership Concession Programme will still exempt them from paying any duty. If the property purchase exceeds $300,000 but is below $500,000, the first-time Caymanian buyer will pay either no stamp duty if the value does not exceed $400,000 or 2% if it exceeds $400,000 but is below $500,000.
To prevent the payments becoming onerous, in a linked property transaction in which the value of transaction exceeds $300,000, stamp duty is due at the 7.5% rate but it can be paid in two instalments of 3.75% for each tranche.