More Canadians are investing in Cayman real estate

Now more than ever, Canadians are investing in Cayman real estate and other international locations. With interest rates rising and taxation changes looming, it is becoming increasingly difficult for Canadian real estate investors to carry mortgages on investment properties. The challenges of the current Canadian housing market have buyers looking abroad. And while there are plenty of international locations for Canadians to choose from, few are as attractive to potential buyers as The Cayman Islands.

Featuring a stable government, resilient real estate market, beautiful beaches, tax-neutral status and offering multiple user-friendly routes to residency and British Overseas Territory citizenship - the Cayman Islands is the perfect place for real estate investments and or relocation outside of the true North.

Ease of doing business in Cayman

If you are already exploring opportunities in the Caribbean, you might be wondering what separates the Cayman Islands from other islands in the region. The answer is simple: no other jurisdiction in the region is as friendly and accommodating to foreign investors.

• While other countries and islands place restrictions on the ability of non-residents to purchase property (e.g. Bermuda), the Cayman Islands offer no limitations on non-resident property ownership.

• This is supported by a streamlined purchasing process. Other jurisdictions inundate non-resident buyers with additional fees, bureaucratic red tape, and legal hurdles. The Cayman Islands make the process simple, with no alien landholding license required. The process in Cayman is intended to encourage, rather than discourage, property ownership from foreign investors.

Land Registration

An added benefit of investing in the Cayman Islands is their use of the Torrens Title system of Land Registration. This system simplifies the process of transferring titles while also providing a government guarantee that each register is correct. This means that the government is obligated to compensate you for any errors or omissions that cannot be corrected. The Torrens Title system essentially acts as government-backed insurance and may eliminate the need for title insurance for more comfortable buyers.

Financing

The availability of financing is another huge draw for Canadians and other foreign nationals entering the Cayman market. Familiar banks like CIBC FirstCaribbean (a subsidiary of the Canadian Imperial Bank of Commerce), RBC, and Scotiabank all have offices on the islands. Competitive interest rates and considerable financing can help you afford your ideal property while still working with familiar financial institutions.

Cayman Infrastructure

The Cayman Islands offer a unique and enriching living experience in the Caribbean—not just due to the beaches and tropical climate. The Cayman Islands attributes its economic success to two factors: financial services and tourism, both anchored by a stable government. And the numbers speak for themselves — the country’s GDP per Capita in 2019 was US$91,392.64 making it number two in North America.

As a British overseas territory, the islands benefit from economic and governing independence, with the added protection and support from the United Kingdom. Through the United Kingdom’s longstanding commitment to the Cayman Islands and their self-sustaining House of Parliament, the Cayman Islands have developed first-class infrastructure to provide its residents with top tier utilities and telecommunications. The islands are also home to world-class healthcare facilities and excellent British and American schools.

Ease of Travel

The Cayman Islands are well travel-connected to the rest of the world. Flights to major cities in North America and the United Kingdom are consistent. The ease of travel is key to Cayman’s success as a financial hub. (https://www.visitcaymanislands.com/en-us/plan-your-trip/getting-here/travel-by-air)

Finance Economy

There is an absence of corporate, capital gains, inheritance, income, or a reoccurring property tax in the Cayman Islands. Although there is no reoccurring property tax in the Cayman Islands, Cayman is not entirely tax-free. You will be required to pay a stamp duty of 7.5% on the market value of the property. This stamp duty is a one-time tax paid in CI dollars to the Cayman Islands Government on all real estate transfers in the Cayman Islands. You will also have to pay 22% import duty on most new items you may be bringing along.

Cayman Residency by Investment

Another benefit for Canadians investing in Cayman real estate is the ability to apply for Permanent Residency. There are two options available for those interested in acquiring residency through property real estate investment:

• The first is the Extended Residency Certificate, also referred to as the Residency Certificate for Persons of Independent Means. This is valid for 25 years (with the opportunity for extension) but does not grant the right to work. To obtain this certificate, an applicant must invest a minimum CI$1 million (CAD$1,569,098.94), of which CI$500,000 (CAD$784,549.47) must be in developed residential or commercial real estate in Grand Cayman. In addition to the investment, the applicant must be able to show a regular source of an annual income of at least CI$120,000 (CAD$188,313.44) or maintain a minimum balance of CI$400,000 (CAD$627,638.26) with a Cayman Islands Monetary Authority-regulated and locally licensed institution. These numbers may vary if you choose to reside on one of the sister islands.

• The more popular option for those seeking to completely relocate to the Cayman Islands is the Certificate of Permanent Residence for Persons of Independent Means. This option grants a lifetime permanent residency, with an eventual path to both Cayman and British Overseas Territory citizenship and the right to work for both the holder and their spouse.

To qualify for this certificate, the applicant must invest CI$2 million (CAD$3,138,334.43) in developed real estate without mortgage financing in the Cayman Islands. The applicant must also prove they can financially support themselves and their dependents. It should also be noted that additional permitting and annual fees are required as work permit holders.

Canadian Taxation on Foreign Property

Canadian citizens still residing in Canada are required to pay property tax on foreign property of CAD$100,000 or more. The exact amount of the tax can vary depending on specific details relating to the property. Filing a Form T1135 is required annually.

If you intend to relocate to the Cayman Islands, Canadian citizens have the option to declare themselves non-residents of Canada. This would allow you to take full advantage of the tax-free benefits of the Cayman Islands. This requires you to sever your residential ties with Canada and typically requires you to dispose of personal property in Canada. You become a non-resident from the date of your departure. So would still be required to file a tax return for the portion of the year you remained in Canada. You may also be required to pay a departure tax, which is essentially the reporting of a capital gain.

Exploring Cayman

It's no wonder more Canadians are investing in Cayman real estate. The opportunities of the Cayman Islands are exciting. And I’m here to help every step of the way.

It starts with a meeting to assess the specific needs and circumstances of your interest in the Cayman Islands. I’ll provide information on all relevant government regulations. Following that, we will plan your first trip to the islands, touring around to give you the lay of the land and connecting you with key service providers and advisors to answer all your questions.

I’ll work with you to identify the essential requirements for your specific property search. Throughout the process, I’ll make sure you have access to the latest local real estate market information. And employing this data with your criteria list, I will locate properties, organize tours, and support you through the sales process. And when you are the proud owner of property in the Cayman Islands, I’ll also make sure you get settled in by helping make connections with local service providers to assist with any relocation needs, from setting up your utilities to shipping your furniture.

If you are thinking about acquiring property in the Cayman Islands or have questions about the process, please reach out. I am proof that it is possible to make a tropical dream reality.

*Exchange between CI and CAD dollars is based on current FX rates and will fluctuate. The CI to USD exchange rate is fixed at 1 CI = 1.2 USD.