The Caribbean is the playground of the rich, famous and those who are looking for an investment in luxury homes. Grand Cayman is one of the most popular islands where expats invest in real estate. Luxury living in Grand Cayman means a higher price tag than you might find on other Caribbean islands or bordering countries.
Why Grand Cayman Is So Appealing
The views of turquoise water aside, Grand Cayman appeals to many for the tax and financial benefits. Expats can freely open bank accounts, borrow money and buy real estate. The Cayman government does not tax property, which means that capital gains, income, property and inheritances are tax-free. Interest on mortgages can be deducted from income taxes in most countries including the U.S. The Cayman government also has stringent privacy laws that ensure that financial information is secure.
The majority of luxury homes in Grand Cayman are mortgaged for the tax benefits, though most expat investors could easily purchase the home outright. Mortgage companies outside of the Cayman Islands generally do not grant loans for real estate in the Cayman Islands because the company would have no legal recourse if the loan were defaulted on. For that reason, there are many mortgage companies and banks that lend to expats and have expertise in dealing with the transactions, no matter which country the buyer has citizenship in.
Purchasing Property In Grand Cayman
Once the sale is made, there is a one-time payment of 7.5 percent of the assessed value of the home to register the title. A stamp duty of 1 to 1.5 percent is also required on homes that are purchased with a mortgage loan. Since many of the homeowners in Grand Cayman value their privacy, many of them purchase the home in the name of a corporation that they’ve registered in the Cayman Islands in order to keep their name off of the title.
As you can see, there are few limitations to investing in luxury living in Grand Cayman. While the majority of investors use their homes in the Cayman Islands as a second home or vacation home, some expats do decide that they want to apply for permanent residency in order to have unrestricted time on the island. There are several categories that the government considers for permanent residency including wealthy retirees, entrepreneurs and investors allowing them residency for 25 years. A recent bill was passed to grant a certificate of residency to lure wealthy investors to bring businesses to the Cayman Islands. The cost of the certificate is $24,000 (USD) and allows the investor, spouse and dependents to live on the island without needing a work permit. The requirements include having a net worth of $6 million (KYD), an investment of $2.4 million (KYD) in a licensed business that has 50 percent of it’s workforce as native Caymanians and having a clean criminal record in their native country.
The islands lure many wealthy investors because of the tax benefits and privacy laws, but the biggest lure will always be the tranquility and beauty of the islands–luxury living at its finest.