Caymanians offered significant stamp duty waivers
(CNS): The Cayman Islands Government is rolling out a new stamp duty concessions package for Caymanians buying property, including second homes or a piece of land. Speaking in parliament last week, just moments before the resignation of his labour minister, who criticised the premier for what he said were his poor leadership skills, Wayne Panton detailed the expanded duty exemptions for local people.
The new deal revises the existing concessions for prospective local homeowners, which Panton said would save them tens of thousands of dollars in duties, making it easier for more Caymanian families to own their own homes. Wearing his minister of finance hat, Panton explained that the plan expands the threshold for concessions to buy either raw land or residential property and introduces a new tier of concessions for Caymanians purchasing a second property.
Caymanians purchasing their first parcel of raw land valued up to CI$250,000 will pay no stamp duty. Where the property value is above $250,000 but less than $350,000, stamp duty will be 3.75% of the difference between that value and $250,000.
Caymanians purchasing their first home or developed residential property valued up to CI$550,000 will pay no stamp duty. Where the property value is above $550,000 but less than $650,000, stamp duty will be 3.75% of the difference between that value and $550,000.
Groups of two to ten Caymanians jointly purchasing their first parcel of raw land valued up to CI$450,000 will pay no stamp duty. Where the property value is above $450,000 but less than $550,000, stamp duty will be 3.75% of the difference between that value and $450,000.
Groups of two to ten Caymanians jointly purchasing their first home or developed residential property valued up to CI$600,000 will pay no stamp duty. Where the property value is above $600,000 but less than $700,000, stamp duty will be 3.75% of the difference between that value and $600,000.
With the changes, Caymanians purchasing their second property can qualify for a discounted stamp duty rate.
Caymanians will pay 3.75% in stamp duty for a second parcel of raw land valued up to $300,000 or a second home or developed residential property valued up to $600,000. Groups of two to ten Caymanians making a joint purchase will pay 3.75% in stamp duty for a second parcel of raw land valued up to $550,000 or a second home or developed residential property valued up to $700,000.
With real estate prices continuing to rise in all districts of the Cayman Islands, the premier said his proposals would place the possibility of home ownership back within the realm of possibility for many Caymanians.
“Prices for a modest three-bedroom home in the Eastern Districts have been steadily rising for years. Even if you’re lucky enough to find a home in the $485-500 thousand price range, at 20%, you’d still need a $97 thousand down payment to access a mortgage,” he said.
“Can you imagine how hard it is to find that amount of money as a single mother with three children, or as a young couple or even as a single person? And even if you manage to get the money together for a down payment, who will help find even more money to pay the thousands and thousands of dollars you’ll need for the stamp duty? Who will help? We will. Under my leadership, this government will,” the premier added.
He said the concessions would increase the number of Caymanians who are able to afford their first or second homes.
Panton is exercising his powers as minister of finance and commissioner of stamp duty to make the benefits available to Caymanians immediately. The process for the legislative amendments is thorough but lengthy. However, once it is completed, it will ensure that these benefits are available for all Caymanians purchasing their first or second properties without being subject to the discretion of anyone.
The premier said the new package of duty waivers for local buyers meets part of his Strategic Policy Statement to find solutions to improve the well-being of the people. “Today, we demonstrate our commitment to enabling wealth generation among Caymanians by making it easier for them to own a home,” he added.
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Who will benefit? Who is a Caymanian?
Is home ownersheip everything it’s cracked up to be? I’m not so sure. Something should also be done about the crazy cost or renting a home.
In every market there is a demand side and a supply side. Unfortunately this policy will only effect the demand side so property prices will go up.
I would be curious to see what the numbers would look like if we said 3% stamp duty for Caymanians and a sliding scale for expats based on the number of years they reside in Cayman.
Expats buying vacation homes or just moving to the island can pay something like 15% stamp duty, with that amount decreasing every year.
Instead of a front-loaded tax, you get an exemption from capital gains in the US.
In the United States, gains from homeownership can be made tax-free under certain conditions thanks to the Internal Revenue Code (IRC). The section of the IRC that provides this benefit is Section 121. Section 121 allows individuals to exclude up to $250,000 ($500,000 for married couples filing jointly) of capital gains from the sale of their primary residence from their taxable income.
To qualify for this tax exclusion, you generally need to meet the following criteria:
Ownership and Use Test: You must have owned and lived in the home as your primary residence for at least two of the five years leading up to the sale.
Frequency Limitation: You can generally use this exclusion only once every two years. However, there are exceptions for certain unforeseen circumstances, such as job loss, health issues, or other qualifying events.
Gain Limitation: The maximum amount of gain you can exclude is $250,000 for single taxpayers and $500,000 for married couples filing jointly. Any gains above these limits may be subject to capital gains tax.
I can understand the thought process about having a slightly elevated price cap for 2 persons purchasing together, as this programme was originally intended to help Caymanians into owning the home they will live in. Recognizing couples seems sensible in that respect.
But up to 10? In what world can 10 people live in a $600-700k home? It’s clearly aligned toward investment purchasing, which was not the point in this housing market.
I completely agree. Discounts are needed only for basic needs not for investments. First one is basic need. Second one is investment. If all get into second one and have to rent, if less renters, which leads to lot of foreclosures, leads to realestate crash… eventually caymanians will be in trouble…
Given that it’s all about ownership second home buyers will have to refund the stamp if they flip the property within say 3 years, right?
No, and when they do flip it and become single home owners again, they’ll reclaim their eligibility.
At last finally hard working Caymanians get a chance to put a roof above their heads. I behoove that 2 for 1 condo purchases for Caymanians should also be put into law. 10% off on a bucket of KFC is also a fine clause as well. John John Seymour hope is with you now to carry the torch trailblazer champion of people noble civil serpent hope and change yes we can!
“POP” – thats the sound of all the real estate agents (pirates) raising the asking prices of all the lower end properties to $550k.
The real estate agents don’t set the prices – demand does. But you are right in one regard- removing the stamp will drive up demand at that level, and with a fixed supply of land and very little development of lower cost housing by our developers prices at the lower end will soar. In 12 months we will be back at the same point, only CIG will have less tax revenue.
you must be new to the game. real estate agents and their evaluation buddies do set the prices. when developers bring their projects to these pirates to market they inflate it to collect as much commission as possible. look up what a re-assignment of contract is. think a little deeper bud.
Trust me, evaluators and realtors are not friends.
Definitely not.
Discrimination against permanent residents on the basis of national origin? Yes, that’s constitutional.
DISCRIMINATION?
Where does it say you are entitle to any thing more than certainty of residence?
Key is in the word “constitutional “.
$550,000? Great, that’ll get you a shitty 2 bed 2 bath at Silver Oaks. Man has no shame.
did you want more of a concession of stamp duty? who can even afford a $550,000 house on today’s salaries? And every time the limit goes up, so too does the base price.
They want free
Every person who buys or has bought a house can. That’s a lot of hard working and sacrificing people. They did it because they deserved it. If you can’t do what they can do then you do not deserve it and no one should have to do it for you. This is between you and God. No one else.
You were doing Ok until God entered the room.
Turns out all those who end up foreclosing, or selling out for a loss, didn’t deserve it at all.
6:22AM – What the hell do you mean “if you can’t do what they can do then you do not deserve it”?
Do you think everyone in life gets by day to day the same way or even has the resources? Stop talking shit and no one wants to hear about God!
Kudos for giving waivers to first time Caymanian home buyers.
However, giving concessions for a second investment property will only make the rich Caymanians richer and do nothing for the poor.
They have to stay on top. Everyone else be damned.
Thank you PACT government. There are so many of us out here with an extra $700K just waiting to purchase a second home. It is so wonderful to know that you are thinking of us.
What more do you want then? To be given a new house for nothing?
The perfect response… a hand out enabling even more self-centered entitlement.
I commend Wayne for this initiative, but basic economics says this is backwards and will increase house prices further. The solution is restricting or heavily taxing foreigners from property purchases. This is what every other country in the world does. Why is Cayman selling out to foreign investors and not giving their own people a chance?
That is not at all what basic economics says. What it does is allow certain Caymanians who don’t have a home at all yet to save money on their first purchase, or some savings on a second home. That gives those folks a leg up affordability-wise compared to everyone else including foreigners.
Most countries actually have zero restriction on foreign investment just like Cayman. Heavily taxing foreign owned properties will not solve your problem and will likely create a bigger one when all those foreigners sell their property, flood the market and crash the entire housing market into the toilet.
You need to go take another class on economics and learn how supply and demand actually work. This is great news for Caymanians.
Strange. I have a masters in economics and thought that was exact How demand and supply works. Fixed or inelastic supply and increased demand = increased price. Want to explain it to me?
I call BS and would bet you don’t have a master’s in anything let alone economics. Throw your name out there so we can check.
You’re wrong because supply is neither fixed nor inelastic (in the long term).
Secondly this change to stamp duty waiver only affects a very small subset of the consuming population. They must be:
1. Caymanian
2. First time homebuyers
3. Most importantly…capable of affording and qualifying for the mortgage on the $550k home.
Everyone only capable of affording and purchase a home in the old bracket does not join this subset.
So you need to weigh the demand of this very small niche against the increases in demand which come from EVERYONE else in the pool looking to buy a house and importantly people with resources moving to this country and considering purchasing a home.
This change is not enough to move the needle on the economic level. If you have a master’s degree in it you’ll be able to do the math to show us otherwise.
Bear in mind that this waiver was modified a few years ago as well and pricing pretty much kept on ticking up. It’s still going to keep ticking up. This is not, by itself going to raise prices.
If I’m wrong I’d be happy to learn.
SMH. Funny how an anonymous poster wants another anonymous poster to identify themselves for fact checking purposes.
Why not go a step further and kick all the furriners out then we’ll have our pick of the houses and all the jobs we most definitely deserve.
Would love that!
Just to be clear – it is Caymanians not Cayman that is selling out to foreign investors.
FIRPTA stands for the Foreign Investment in Real Property Tax Act. It is a U.S. federal tax law that governs the taxation of gains made by foreign individuals and entities from the sale or disposition of U.S. real property interests. The primary purpose of FIRPTA is to ensure that the U.S. government can collect taxes on gains derived from U.S. real estate transactions involving foreign investors.
Retroactive?
For 20 years?
looks like the market is faltering. Hold on for 12 more months before thinking about buying. let this price mania subside.
you been saying that for 5 years…
Thank the Lord Caymanians now got a chance in our own country
All hard working Caymanians have the same chance as hard working Expats. Even more than hard working Expats. It’s the non working or hardly working ones that do not have a chance. Just like every other place on Earth.. God makes people who and what they are. Cry to him. If your worthy he will tell you what to do.
You are clearly an expat. Kindly stay in your lane, you do not know the struggles that Caymanians face.
Well done PACT and Premier Panton. Great to see something substantial that benefits Caymanians and not just private sector interests and rich people.
12.13pm Since most Caymanians these days are actually Jamaicans that is who will benefit. Therin lies the problem why every effort to assist us.
I absolutely agree that Caymanians should have support purchasing a home, and stamp duty waivers for first-time buyers makes complete sense.
However what makes no sense is giving people stamp duty reductions for second homes. – This is not needed for Caymanians to have a home, and if you can afford a second home, you can afford to pay the proper rate of stamp duty.
All this will do is allow richer Caymanians more opportunity to buy investment homes which then pushes the house prices up for first-time Caymanian buyers!
Panton cannot be so thick as not to realise this, which makes this seem like vote buying. – It also reduces the income to the Government, which is concerning especially since they are burning through it at a considerable rate.
The provisions for second properties would have been included for the benefit of the wealthy children and nieces/nephews of the government ministers in order to line their pockets further.
Its highly inconceivable that this government would pass any pieces of legislation that was completely selfless I’m afraid.
I have young kids and would like them to have something. Don’t assume the second home is simply for the single purpose of paying less stamp duty.
It seems like vote buying because ….it is. The real problem with Caymanians not being able to afford a second home is not solved by making a select group of Caymanians be able to buy 2 – or more realistically increase their profit margin when they flip that second home to an expat.
Finally something useful done by this wutless government
this will cause more families to be stuck in a poverty trap of purchasing a home they cannot really afford.
recipe for future foreclosures
You’re talking about of your backside. Saving stamp duty has no impact of note on the affordability of the mortgage.
How does reducing the size of the mortgage needed by the amount of the stamp duty avoided not affect affordability? Think your backside is talking, not the OPs.
does not nothing to address the real issues of what is causing the problem in the first place.
If anything it will feed and fuel those ‘issues’.
caymanian welfare state is a step closer….but all too little, too late.
cayman will become a two tier society soon…the rich and then low paid expat labour who do all the basic jobs. there is no future for the middle class in cayman.
How about also clamping down on the excessive commission charged by real estate agents, who add absolutely NOTHING to a property transaction.
Well said. but will never happen as some of the honourable members have a very personal interest ensuring expat realtors continue to steal a living.
And stop issuing work permits for real estate agent jobs – where no specific skills, intellect, education or work experience is justifiably required to perform the job.
Facts, as a Caymanian agent it is so frustrating seeing the amount of expats who are coming in here on a work permit to sell real estate. It should not be allowed. Look at all of the brokerage websites, hardly any Caymanians are hired. They have a ton of foreign agents.
it’s a free market…if so easy, go out there and undercut them….
Not true. I am always glad to use an agent when doing real estate transactions. My agent did a fantastic job for me and mitigated a lot of stress. She helped make the whole process more straightforward and hassle-free. The marketing was superb, professional photos were taken of my property (at the agents expense) aerial drone shots as well, she handled the open house, all showings she took care of so I didn’t have to worry about it, stayed on top of all of the necessary dates for us to get to closing. I wouldn’t say that agents bring nothing to the table, maybe ones that you have dealt with before, but not all of them. There are those who do genuinely care about their clients.
Did he define what he meant by “Caymanian”, as the are so many types now
This should have been “imagined” a long time ago. Now it is too late.
Fantastic. Real help.
Great, now we’ll never see properties priced below $550k CI. Thanks CIG! 🙂
i so agree. This has happened EVERY TIME the limit has increased.