Local first time buyers’ tax concession increased
(CNS): Concessions on stamp duty for Caymanians buying their first home or land to build on will be increased in the New Year, when 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. Government said the increase was designed to help first-time Caymanian property buyers and low-income members of the public. The bill paving the way for the change, published this week, also closes a loophole that government said some property developers were using to cut stamp duty charges.
Officials said in a release about the new concession regime that any increase in revenue that results from closing the loophole could be used for public infrastructure projects and other programmes.
The increasing practice of developers who sell land to buyers then insist that the buyers use the same developers to build the house has seen them dodge stamp duty on the dwelling. Government said this situation of “linked property transactions” has resulted in stamp duty being paid only on the value of the raw land and significant revenue loss for the government.
One of a long list of new pieces of legislation that politicians will be debating during the final Legislative Assembly meeting of 2018, the amendment will mean that Caymanians will not pay tax on their first home unless it exceeds the thresholds.
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.
“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,” said Finance Minister Roy McTaggart. “This is also government’s way of trying to help all lower-income persons in the Cayman Islands attain property ownership.”
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 minimise 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.
See table explaining new changes and amendment bill in CNS Library
Category: Government Finance, Local News, Politics
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CNS – Did they say exactly when this will come into effect? January 1, 2019?
CNS: Yes, the bill (link provided) states:
Clause 2 provides that this Bill shall come into force upon publication in the
Gazette but the amendments made shall have effect only in relation to –
(a) any land transaction which is executed on or after the 1st day of
January, 2019; and
(b) any request for a concession, waiver, refund, abatement or any
other type of request which can be made under the principal Law
and which is made on or after the 1st day of January, 2019.
The price of raw land went up 5.8% after this announcement. Home prices are up 19.3%from this week. That’s how it works. Trickle up effect.
Based on what?
Huh? No it didn’t….
Raw land. Lol
This increase is only for the rich, where can a poor man get
a bank loan for $150,000 for land and $400, 000 for a house .
Is Alden actually hearing the cries of Caymanians?
Finally the PPM / UDP GOVERNMENT is beginning to do something that actually benefits Caymanians, instead of all they have done to benefit foreigners and big business with CORPORATE WELFARE, at the expense of Caymanians.
Let’s see if CAYMANIANS benefit from this – what Caymanians. Paper and free loaders.
Who cares. Cayman future now is like a hollow plastic boardwalk. I can go back home too.
*Styrofoam boardwalk
OMG Why are you folks so negative (are these only expat comments?)? Why would this be a bad thing??? First time home buyers should be encouraged to jump in the housing market! Why shouldn’t there be an incentive of this kind?? Why would anyone think that Caymanians shouldn’t have this incentive?
I am genuinely interested in why you negative people are jumping on this. Most property is so over priced that most Caymanians will struggle to be able to save up for the down payment. It took me 7 years to save up enough to get out of renters hell.
Erase one thumbs down. I liked your comment but am so used to all the shite comments that i accidently hit the wrong thumb
Think you’ll find it’s Caymanians being negative. I posted a positive and I’m an expat. But thanks for adding to the divide.
What the CIG should do is introduce new and escalating Stamp Duty bands for those wealthy lawyers and accountants that are hoovering up the mid-priced apartments etc for rental properties. They are squeezing less affluent parties out of the market because they have cash to burn. Perhaps they should pay 10% for their second property and 15% for the third.
supply and demand
Wrong. That’s prices
No, they just need to enforce the Trade and Business Licensing Law.
More illegal discrimination of settled residents on the basis of national origin.
This whole thing has been a huge shame for the real estate agents to push prices up, when it was first enacted, tons of land was sitting in the eastern districts averaging $8k a lot the month that the concession went into place all that land shot up to 25k as that was the ceiling for first-time land buyers at the time, when I added it up 7% on 8k is $560 difference between 8k and 25k is 17k tell me which one is a better deal saving on paying taxes or fattening a sellers pocket, this was one of the dumbest moves the CIG has ever made for its people, I would completely abandoned this farce to inflate prices and let the market rule.
Land has never shot up in the east.
Land hasn’t shot up anywhere past Hirst Road.
You all don’t know the price of land in cayman
They should up it, prices are up so it makes sense.
CNS, Can you do a story about what is happening with stamp duty after you purchased land and then build a house? Is the government now going to make you pay stamp duty on the land and then on the property when you build it?
CNS: I’ve passed this onto Auntie on CNS Local Life.
If it is part of a linked transaction. Example seller of the bare land is also the builder of the house etc on that land
I am a young Caymanian (if 30 is young??). Average wage, not in law or accounting. This will really really help me because I have been competing with cash buyers for the lower end properties. Owners have preferred to sell to them than wait for me to get a mortgage. But as soon as I went out of the exemption range, the house would be unaffordable with stamp duty. Now I will be able to afford a house just above “cash buyer investment property” range and have a place to live. This makes me really happy.
You are a plant, thanks for sharing anyway.
come on that may be true but it’s not a nice comment. And obviously this young person has been on the prowl to acquire so they seem pretty rounded to me
House trolls can afford it I think.
You will be able to afford the house but at the other end …..your pension …well it’s fast lay dissappearing.
I think that if government hadn’t troubled /raised the bottom amount $ , for first time Caymanians buyers , it would have given them a much easier head start in life . It is obvious to me now that government believe that Caymanians not only have to be educated but also rich , or have lots of money to start their lives .
I believe that government is forgetting that you have to crawl before you can walk .
great deal. But should only apply to generational Caymanians.
Why?
And they need to be a certain shade.
So if a first time buyer pays no stamp duty, what’s to stop him gifting it to his brother who has numerous properties and the brother paying him the purchase price and avoidng the stamp duty. Are there restrictions on transfers in these cases?.
Currently I believe the law is that you have to own it for 5 years before you can transfer/sell. If you do so before the expiration of that 5 year period, you will have to pay the full stamp duty
That is correct
Fantastic news. Hqppy to see this Government giving young caymanians more opportunities
This is crazy! Half Million dollar first buy and that’s to help poor Caymanians get in to the real estate market? Who is coming up with this stuff? WHO?????
Oh no, we’re not entitled…
It’s not forcing you to spend half million. That is a maximum.
Reading is hard.
How do they know who is Caymanian?
You’re blood Caymanian if you descended from the original settlers around 100-200 years ago.
Prove it!
so you if descended from the original expats you are a caymanian???
but not if you descended from more recent expats?
Couldn’t have summed it up better!
An expat is defined as someone who lives outside of their native country.
The islands weren’t a ‘country’ prior to people coming here and starting the ball rolling. Yes, they moved from another country (Ireland for example), but they claimed these islands as their native country as there wasn’t anyone else, and thus their bloodline is the native Caymanian bloodline. Finders keepers.
I was born here after 8 generations of my ancestors living here and thus was born with the right to live and work. I didn’t move here and apply for the right to be called a legal Caymanian.
Note I have nothing against expats nor do I oppose granting Caymanian status to residents who deserve it, but there’s clearly a difference between those who moved here from abroad 5 years ago, versus those who were born here because their great-great-great-great-great-great-great-great-grandfather was also born here.
8 generations is close but not close enough to that magic 10 generation threshold
Umm, Cayman is not a country ….
How is it that other nationalities get to call themselves native to their home, but here expats tell us there is no such thing as Caymanian.
So British people are not British…
Americans are really Europeans…
Europeans are really vikings…
Australians are originally British inmates….
Um, yeah, that’s how it works. The Native Americans walked across what used to be the land bridge between Asia and North America and were called native by those who arrived much, much later. I can trace my ancestry back in Cayman 350 years. Choices made by people whose names I will never know led to me being from this little rock. I had no choice myself. Does anyone seriously think that doesn’t make me different to someone who reaches adulthood, works for several years, sees Cayman in a magazine and decides to find out if there are any jobs here? Or even more crudely, has a friend from the same home country say “it’s great out here, no taxes, sun all the time, get on it mate!” It’s insulting to suggest and yet people do it all the time. Look up the definition of an indigenous people: an ethnic group of original inhabitants of an area. Stop trying to say you are the same as us. You are not. You know you are not.
You may be a blood Caymanian but you have limited knowledge of Cayman’s history- first settlers more than 200 years ago.
I agree entirely, now keep your caymanians in Cayman because the word is out and other countries do not want you.
4.27pm..look in the mirror..
That is called your government looking out for rich and to hell with poor Caymanian . I hope you see it .
Not sure the timing of this makes sense from an economic perspective.
The economy is already growing at above normal rates; 4% was recently reported.
Now this lowering of costs (stamp duty threshold) will spur more demand when demand is already high.
Typically, a government using such economic policy tools would wait to deploy them when demand needs to be spurred.
get out of here with your basic economic principles!
So your opinion is that those setting policies to manage the economy should ignore basic economic principles?
Thank you, please drive through. Do not pass go. Do not collect $200.
Real Estate is going up and government has put up the first-time Caymanian buyers tax . That’s your government looking out for your future .
It will benefit first time buyers but I don’t know which low income worker can afford or will qualify for a loan to buy 150,000 thousand dollars land or 300,000 -400,000 thousand house. Don’t really know who you are trying to help here? Just more coolade.
The waiver is on purchases UP to $150,000 or $300,000 as the case maybe. It’s not a concession for the rich. In their anxiety to be critical, most of the posters have missed the point.
So 9:25 pm
I get a waiver of stamp duty based on cost/value of property. Doesn’t change the mortgage payment to the bank though does it?
Understand this. Very few Caymanian people can afford a mortgage over CI$1,000.00 a month. Very few.
I know, I already have to pay $2,000 a month on a car loan for my brand new Tahoe, I can’t afford another $1,000 for a mortgage
Well your priorities are obviously not in order.
I’m a chartered analyst and now confused as hell…. good luck rest of the island trying to figure that out!
Please explain what a chartered analyst is. Never heard of that profession
I analyse charters. Do you have any for me to analyse?
https://www.investopedia.com/terms/c/cfa.asp
If one can afford a 400k home, one can afford the corresponding stamp duty.
Not true. Including stamp duty, a $400K property means that you need to have $78K in cash to purchase. (1% bank fee, 1% lawyer fee, 10% down payment and 7.5% stamp duty. Total 19.5% or $78K ) Many people could afford a $2Kpm mortgage, but how many people do you know with $78K cash in the bank to purchase the property?
I’m not sure 78k would be the correct stamp. But any stamp duty sucks
$78k total cash needed up front. Stamp Duty would be $30k
Live within your means.
Exactly how will that help low income persons looking to buy a home or piece of land? The only people that will benefit are the developers and people that can qualify and could have afforded to pay the stamp duty anyway. Low income persons will not be able to qualify for that level especially with interests rates on the rise, with no end in sight.
The last time the stamp duty was increased all of the “affordable housing schemes” increased their sale prices also because there was no longer a need to keep it below the $200k mark or close there to.
Furthermore land that is listed at 99k for the tax break incentive will just be increased to 125k or so.
1 step forward 2 steps back.
Downtown Reach the new one on Linford Pierson seems to be pricing from 200k still!
Yeah but it’s not much to those
Beggars can be choosers. You have to live with what you can afford, not what you want. I make $100K per year and bought a $200K apartment. I could afford much more, but i am looking to live, not impress other people.
yeah for a 1 bed!