There is no direct taxation in the Cayman Islands and the only form of property tax is a one-time stamp duty, similar to a land transfer tax, imposed on all transactions involving land.
In November 2012 lawmakers approved a bill that made property transfers in all areas of Grand Cayman, Little Cayman and Cayman Brac subject to a uniform stamp duty rate of 7.5 per cent. Exemptions exist only for first-time Caymanian buyers.
First-time Caymanian buyers have to pay no duty when purchasing land that is valued up to $50,000 or homes valued up to $200,000. Land transfers valued between $50,000 and $75,000 and home purchases valued between $200,000 to $300,000 are subject to a 2 per cent duty for Caymanian first-time buyers.
For all other land and property transfers the stamp duty is 7.5 per cent throughout the Cayman Islands irrespective of the immigration status of the buyer.
Revenue
Previously a 7.5 per cent stamp duty rate applied only to property in premium areas of Grand Cayman, such as downtown or along the Seven Mile Beach corridor. Non-Caymanians paid 6 per cent for property in other areas of the Islands, while Caymanians paid 4 per cent. Last year’s changes to the stamp duty rate therefore represent an increase of 25 per cent for non-Caymanians and 75 per cent for Caymanians who are not first time buyers when purchasing property outside of formerly premium areas.
Historically the stamp duty on land transfers has brought government between $21 million and $40.9 million in revenue during the peak budget year 2008/09. Last year government raised $23.2 million from land and property transfers and expected to raise 26.7 million in the current budget year ending in June.
How is it calculated?
Stamp duty is charged on all documents relating to land and land transactions, and applies to direct transfers, leases and easements, as well as the indirect transfer through the sale of shares in company owning land for example. The duty owed is calculated based on the purchase price or the fair market value of the land and the building at the time of the transfer, whichever is greater.
Typically the applicable value is stated in the document submitted to the Lands and Survey Department but the department has the power to review each document and transaction and set a property value independently.
The value of movable inventory, such as furniture, appliances and other “chattels” is excluded from the stamp duty calculation. Most reviews by Lands and Survey are in relation to the stated value of the chattels.
The duty has to be paid within 45 days of execution of the transfer.
Stamp duty is generally paid by the buyer and standard contracts tend to state it is the buyer’s obligation to pay the duty but there is no restriction for the parties involved in the transaction to agree other arrangements, for example, the seller paying the entire duty or the parties sharing the cost equally.
History
Over time stamp duty rates have changed frequently. The Lands and Survey Department website shows that in 1973, a 7.5 per cent rate was applied on all properties. In 1995, the rate was increased to 10 per cent for properties valued at $250,000 or more.
In 1997, that was adjusted so that a 9 per cent rate applied to properties in prime areas, and 7.5 per cent was applied elsewhere. In 2001, the rate was cut to 5 per cent everywhere.
In 2006, the rates were changed to 7.5 per cent in prime areas, 6 per cent for non-Caymanians and 4 per cent for Caymanians.
In April 2009, the rates were changed to 5 per cent in prime areas and for non-Caymanians, and 3 per cent for Caymanians. And in October 2009, the rates were changed back to 2006 standards.
The most recent change effectively reverts the law back to where it was from 1973 to 1995, except for first-time Caymanian buyers.
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