Cayman Goverment May Extend Stamp Duty Break

by Amanda Banks, Tax-News.com, London

21 April 2003

With less than one month remaining on the government's special reduction of stamp duty designed to boost the property market, a report from Cayman Net News has said the government is intending to extend the reduced rates for another 6 months.

The lower rate of stamp duty was introduced in November 2001 and was primarily aimed at stimulating the construction and real estate sectors during a quite severe economic downturn. Levies were reduced from between 7.5% and 9% to a flat rate of 5%.

The initiative appears to have had a beneficial effect on the Cayman real estate market, and many participants feel the timing would be wrong to increase rates back to their previous levels, citing continuing economic instability and uncertainty in the region and globally.

"The reduced stamp duty most definitely helped," said Billy Cuthbert of the Cayman Islands Real Estate Brokers Association. "The real estate market has made a turn-around, but it remains to be seen if that turn-around is sustainable. I think it would be a shame to yank the stamp duty reduction before the market is totally stabilized," Cuthbert warned.

Others who make a living from the jurisdiction's real estate industry, such as real estate agent Scott Roe, says any increase in stamp duty would severely hit offshore sales. "Since 80% of our real estate business comes from off-shore, I found there was a lead time of six to nine months before our foreign investors found out about the reduction and got down here to look at properties," Mr Roe told Net News.

"The stamp duty reduction, along with the low interest rates and the low down-payment terms being offered by banks, have stimulated the local housing market a great deal," Roe continued, adding, "I would certainly like to see the stamp duty reduction extended for another six months."

The official deadline for the current special rate of stamp duty is 14 May, and all the relevant paperwork must be completed by this time to qualify for the 5% rate should the government fail to extend the period another 6 months.

Recommended