One of the biggest attractions of buying property in the Cayman Islands is the complete absence of income, property, corporate, or inheritance tax. A buyer pays a one-time stamp duty payment of 7.5% on the market value of the property at purchase and that’s it.
But are there hidden costs, other fees for services or facilities that could come as a surprise when everything’s signed and sealed? Cayman luxury property sells agents say buyers of Cayman property should expect to pay an additional 10%-12% of the purchase price on other costs, such as the 7.5% stamp duty, a home inspection report, a mortgage and all related legal fees. But there are also other considerations, such as running costs that should be considered.
If you buy a property which is part of a strata plan, you will have to pay a monthly strata fee for the upkeep, management, and maintenance of these facilities. This is like a Homeowners Association fees in the States. The monthly strata fees vary depending on the complex, the location, and what is covered. Sometimes the Insurance cost is included in this, sometimes the Insurance is paid separately. You should pay attention to this figure on each property brief and confirm with the Seller what exactly it covers.
If you’re applying locally for a mortgage, a bank will require a report on the ‘Market Value’ of the property prepared by a professional valuation surveyor. Aim to pay in the region of US$500 for this report. A mortgage from a bank will require a deposit of up to 30% of the purchase price and is also subject to an additional stamp duty of between 1% and 1.5%. Banks will also require a property insurance policy and in many instances a life insurance policy.
Ask your Cayman Islands real estate agent to investigate the costs of running your chosen property in the summer and winter months. A four-bedroom house on one-third of an acre can have an average water bill of US$750 per month and an average monthly electricity bill of US$1,200 or more, depending on the size of the house, the quality of the insulation and the size, age and efficiency of the cooling system.
When choosing & considering luxury homes for sale in the Cayman Islands, remember that high-end appliances, advanced electronic connectivity and security systems, boat docks, swimming pools, landscaping, outbuildings, the latest building and HVAC technologies –all require a level of expertise and maintenance to be kept in good working order.
Your lawyer will protect you from some pitfalls, such as unpaid strata fees by the previous owner. Other problems are less obvious: they can include making sure the final water bill on the property has been paid by the previous owner, that A/C units are in good working order, have been properly maintained and will not need repair or replacement at great cost after you move in, and that the property you buy does not have infestations of ants, roaches, termites or other pests.
If you are buying a condo, your realtor should request a report from the strata’s property management company that confirms whether any special assessments are planned on the apartment complex. Special assessments can involve considerable costs.
And finally, the general cost of living: remember, just about everything in the Cayman Islands is imported and is subject to duties – from food to furnishings to appliances to vehicles. These duties add an average of 22% to the cost of goods, making the cost of living as high, or higher, than many international cities with a reputation for their high cost of living, such as New York, Hong Kong or London.