The recently enacted Land Holding Companies Share Transfer Tax (Amendment) Law 2015 has brought in line the levels of duty payable for acquiring the shareholding in a land holding company, versus the more traditional method of transferring legal title in a real estate asset.
Since December 2012, save for a small number of exceptions (including exemptions for first time Caymanian purchasers of residential real estate, up to a certain property value), the rate of stamp duty payable on regular real estate transfers has been fixed at a rate of 7.5% of a property's value.
Prior to the enactment of the new legislation on 26 June 2015, the original 2007 law stated that a party acquiring real estate by taking transfer of the shares in a corporation that held the land may have paid between 4% and 7.5% depending on where the property was situated and whether the purchaser was Caymanian. The new legislation means that all purchasers, regardless of whether they are Caymanian or where the property is located, will pay Land Holding Companies Tax at a rate of 7.5% that the value of the property bears to the percentage of shareholding being transferred. The original legislation does continue to offer an ability for purchasers of shares to approach the Financial Secretary for an abatement of the tax payable, though this is subject to certain stipulations and is ultimately at the Financial Secretary's sole discretion.
When calculating stamp duty on any real estate transaction, it is worth noting that the Government has the ability to reassess the amount of duty payable where they feel the price paid for a property is lower than its market value.
Stamp Duty rates on security registered against real estate are unaffected by these recent changes, remaining at 1% of monies advanced where the sum secured is CI $300,000 (US $357,143) or less, and 1.5% of the monies advanced where the sum secured is in excess of CI $300,000 (US $357,143).
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