Stamp Duty To Go Up On Cayman Island Property Purchases

by Amanda Banks, Tax-News.com, London

03 May 2006

The Cayman Islands is to introduce a new tiered rate of stamp duty for real estate purchases and lower duty rates for Caymanians under new measures announced by Keith Jefferson in last week's budget.

Following the September 11 attacks and the subsequent economic downturn, the Cayman government lowered stamp duty to 5% from 9%. However, Jefferson announced that in certain areas of the country, this rate will be increased to 7.5%.

The higher rate will apply to certain parcels of property along the West Bay Road corridor and certain parts of George Town, Jefferson explained.

Elsewhere in the Islands the current rate of 5% will be increased to 6%.

The Government will also seek the introduction of a special rate of 4% stamp duty in respect of property bought by Caymanians, although the special rate will not apply to the parcels of property now subject to the 7.5% rate.

In addition to the special 4% rate for Caymanians, further concessions are to be offered to nationals acquiring property for the first time. Under this change:

• The present limit of $35,000 for the purchase of undeveloped land will be increased to $50,000 and the applicable rate of duty on such transactions will be zero percent;
• If the land that is acquired has a value in excess of $50,000 but does not exceed $75,000, the applicable rate of duty will be 2%;
• If the land purchased exceeds $75,000, a Caymanian acquiring such property for the first time will pay a 4% duty rate;
• The present limit of $150,000 applicable to the purchase of property that includes a residential building will be increased to $200,000. The relevant rate of duty on such transactions will be zero percent;
• If the value of the property purchased exceeds $200,000 but does not exceed $300,000 the applicable rate of duty will be 2%; and
• If the value of the property purchased exceeds $300,000 the applicable rate of duty is 4%.

It is expected that these changes in the rates of Stamp Duty will generate a net additional revenue of $6 million during the 2006/7 financial year.

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