Buying real estate in the Cayman Islands using crypto represents a modern approach to investing in one of the most serene and financially advantageous locales worldwide. Known for its crystal-clear beaches, robust financial services, and favorable tax laws, the Cayman Islands has increasingly embraced blockchain and cryptocurrency technologies.
In 2020, the Cayman Islands adopted the VASP Act, which licenses and regulates “virtual asset custody services or… virtual asset trading platform(s).” This Act set the framework for licensed third parties to facilitate crypto real estate transactions. The VASP Act came into force in 2021, and the country also amended various other laws and regulations to ensure a streamlined application of the Act, a sign of the country”s commitment to digital assets.
Investing in real estate in the Cayman Islands with crypto is a very appealing proposition. Below, we discuss the advantages of owning real estate in the Cayman Islands, along with how you can buy real estate with your crypto.
Advantages of Owning Real Estate in the Cayman Islands
Tax Benefits
Living in the Cayman Islands can offer substantial tax relief due to its lack of direct taxes such as annual property taxes, capital gains taxes, and inheritance taxes. However, it’s important to account for the one-time “stamp duty” of 7.5% paid to the government upon purchasing real estate. The stamp duty is required to be paid in the local Cayman Islands Dollar (KYD), but you can have crypto converted to cover these costs as well.
You should understand the potential tax implications in your current jurisdiction of residence. We recommend speaking to a tax lawyer in your jurisdiction of residence prior to completing any cryptocurrency sale.
Stable Socio-Economic Climate
As a British Overseas Territory, the Cayman Islands enjoy a high degree of political stability, bolstering its appeal to international investors. It also boasts a thriving economy driven by finance and tourism, which supports its vigorous real estate market. The only downside to the robust economic climate in the country is that daily living costs, groceries, and utilities such as power can be pricier than North American or European norms.
Unrestricted Foreign Ownership
Unlike some countries, the Cayman Islands does not impose restrictions on foreign ownership of property. This makes it easier for non-residents to purchase and own real estate. Additionally, the government supports foreign investment, and the property-buying process is relatively straightforward and transparent. An individual can own real estate in their own name, or they may form a corporation that owns the real estate.
High Quality of Life
Residents enjoy a high standard of living, marked by top-notch healthcare, modern infrastructure, and a welcoming community atmosphere. The climate and natural beauty, including pristine beaches, enhance the living experience.
Notably, the country is the safest island in the Caribbean, making it an excellent home for families with children, retirees, young professionals – or those just looking for a peaceful and safe tropical island to call home.
Diverse Real Estate Market
The Cayman Islands real estate market offers a wide range of properties to suit various tastes and budgets, including luxury beachfront properties, canal-front properties, inland properties, commercial real estate, and undeveloped land.
Flexible Residency Options
Property owners in the Cayman Islands may enter as tourists for up to 6 months per year, or they may choose to qualify for Residency Certificates that allow them to live in the country for the entire year. Residency Certificates can be particularly appealing for retirees or those looking to relocate permanently. The country currently offers two types of residency via real estate which you can discuss in more detail with an experienced Cayman Islands immigration lawyer.
Certificate of Permanent Residency – This requires a minimum investment of US$2.44M. There is no term limit for this certificate, and it does not come with the right to work, but bearers of this residency can apply for a variation to work in the country. You are required to be resident in the country for a minimum of 1 day per year.
Residency Certificate—This Certificate requires a minimum investment of US$1.22M and has a 25-year term limit; it does not allow the right to work. You are required to be resident in the country for a minimum of 30 days per year.
Purchasing Real Estate with Cryptocurrency
If, after considering all that the Cayman Islands has to offer, you have decided the country is where you would like to purchase real estate, the next step is understanding how you can leverage your cryptocurrency to actualize this goal. Below, we break down what this process looks like.
Selection of Real Estate
Explore property listings through local sources like CIREBA and EcayTrade to find your ideal real estate. Since you can convert your crypto into fiat currency, any listed property is available for purchase with your crypto.
Engagement of Professionals
Escrow/Conversion Agent: Engage only with government-licensed escrow agents. Parallel is the only licensed crypto escrow/conversion agent for real estate transactions in the country at the time of writing.
Real Estate Agent: Engage an experienced realtor in the Cayman Islands. They can be extremely helpful in securing the real estate that best meets your needs.
Lawyer: Engage an experienced real estate lawyer to help you navigate the complexities of a crypto-related property transaction.
Financial Transactions
Once you have engaged the right professionals and found the real estate you wish to purchase, you can make an offer. If your offer is accepted, you can choose to enter into a purchase agreement. While it is still uncommon for sellers to accept crypto, your crypto can easily be converted to complete the transaction in fiat currency. It is crucial to engage with licensed conversion services to ensure legal compliance and security.
As previously mentioned, Parallel is a licensed escrow/conversion agent in the Cayman Islands. We recommend you touch base with its CEO, Laura Birrell, as your first stop in the crypto real estate transaction.
Compliance and Verification
The escrow agent and lawyers strictly adhere to the Cayman Islands AML regulations and ensure thorough due diligence on the property and parties to prevent any legal issues. This will require you to provide various pieces of information, such as,
- References
- Notarised copies of passports
- Wallet addresses of where the crypto funds for the transaction are stored
Note that it is possible that additional documents and/or information may be required by the lawyer or escrow agent to satisfy the AML requirements.
Closing the Transaction
After the AML is approved and a purchase agreement is agreed upon, the escrow agent will receive the crypto, secure the funds, and release the funds to your lawyer, as required by the purchase agreement. Your lawyer will ensure a smooth transfer of property title from seller to buyer and will complete all necessary government registrations.
Conclusion
Investing in Cayman Islands real estate using crypto is a forward-thinking approach that combines the allure of a tropical paradise with the advantages of cutting-edge financial technology. The Cayman Islands’ favorable tax environment, political stability, and high quality of life create an ideal backdrop for property investment. The implementation of the VASP Act demonstrates the country’s proactive stance on regulating and facilitating crypto transactions, ensuring security and compliance. By engaging with knowledgeable professionals and leveraging licensed escrow services, investors can navigate the complexities of crypto real estate transactions efficiently.
Ultimately, the blend of traditional real estate stability and modern financial innovation positions makes the Cayman Islands a prime destination for savvy investors looking to capitalize on the benefits of both worlds.
