Parliament has approved an increase in stamp duty on luxury property and land from 7.5% to 10% for transactions of $2 million and above, with the new rate taking effect 1 January 2026. Despite the headlines, the real estate industry is not showing signs of panic.
What’s Changing – and When
The higher rate applies only to properties and land valued at $2M+.
Regulations confirming this were approved on 15 December, and the effective date is locked in for 1 January 2026.
Several major luxury developments are expected to complete in 2026, including:
- The Watermark
- Grand Hyatt
- Dolphin Point Club
- Serrana
These projects form a big part of the upcoming luxury transaction pipeline.
Early Market Reaction: No Clear Disruption Yet
Because the window between announcement and implementation is short, it’s still too early to draw firm conclusions about pricing or sentiment.
Initial CIREBA-based data reviewed by Provenance Properties shows:
- The CI$2M+ segment typically averages 7–8 sales per month.
- November recorded 9 sales over CI$2M (some already in motion before the change was announced).
- By mid-December, only 3 such sales had closed.
Provenance also noted that completed sales are a lagging indicator.
Looking instead at listings placed “under contract,” they saw no strong pattern pointing to a clear reaction, suggesting some of the movement may simply be seasonal.
On-the-Ground Feedback: A Sense of Urgency
Not everyone in the industry describes the response as neutral.
RE/MAX broker Kim Lund reports increased urgency from buyers who were already close to a decision, as they try to secure the 7.5% rate before the 10% rate hits.
In simple terms:
- Some deals are being pulled forward into late 2025.
- That could mean a short burst of activity now.
- Followed by a potential drop-off right after 1 January 2026.
Where the Extra Money Goes
The total increase in duty is 2.5 percentage points (from 7.5% to 10%).
Government has committed to “earmarking” 1 percentage point of that increase — about 40% of the additional revenue — for housing and housing-related projects intended to benefit Caymanians.
Using government’s own projections as an example:
- If the increase generates $11.7M in 2026
- Roughly $4.7M would be directed to this housing allocation.
Why Some Think the 10% Rate Will Hold
Not everyone is convinced the higher rate will deliver the revenue government expects.
Critics point to a short-lived 10% stamp duty in the 1990s, which reportedly failed to meet targets.
Those arguing that this time is different point to structural changes:
- Today’s market has a larger, more resilient luxury segment.
- Many buyers in current developments are already contractually committed to complete in 2026.
- Projects like Grand Hyatt, Watermark, Dolphin Point Club, and Serrana may proceed regardless of the higher duty.
From this view, 2026’s luxury transaction volume may hold up even with the 10% rate.
The Real Question: Long-Term Demand Above $2M
The key issue isn’t whether 2026 looks strong.
It’s what happens after everyone has priced in the new normal.
A higher transaction tax at a fixed threshold usually creates a few well-known behaviours:
- More price sensitivity above $2M, with buyers negotiating harder or asking for concessions.
- “Bunching” just below $2M, as sellers aim to stay under the higher-duty line.
- A potential slowdown in high-end turnover if people feel the after-tax cost makes upgrading or buying a second property less attractive.
Finance Minister Rolston Anglin’s position is that Cayman’s luxury segment can absorb the change, given the growing role of international buyers.
Kim Lund agrees, arguing the market has shifted significantly since the 1990s and now rests on a deeper base of higher-end purchasers.
Andrew Gilbert, chair of the Cayman chapter of RICS, has also suggested that longer-term international demand is unlikely to be derailed by a single one-off tax change.
For these buyers, Cayman is judged on its overall package — tax structure, stability, and efficiency — not just one line item in closing costs.
What This Could Mean for $1.0–$1.3M Homes
Directly, the higher duty does not apply to this band.
Indirectly, there could be a small and uneven spillover:
- Some buyers who might have stretched just over $2M could trade down into the sub-$2M market, increasing competition close to that line.
- The $1.0–$1.3M range only really benefits if this trade-down demand travels that far down the ladder — which is not guaranteed.
This segment is typically more financing-sensitive.
Interest rates, inventory, insurance and maintenance costs, and general economic confidence can easily outweigh any ripple effects from a tax change at $2M+.
Bottom line: the new duty might give sub-$2M demand a modest boost, but whether $1.0–$1.3M homes “go up in value now” will depend much more on broader market forces than on this single policy shift.
Outlook for 2026 and Beyond
For now, realtors appear broadly confident that Cayman’s luxury market can digest the higher stamp duty.
Short term, activity is likely to be supported by buyers trying to complete before 1 January 2026.
The real test comes later, once the 10% rate is fully factored into buyer psychology and seller pricing.
That’s when we’ll see whether the $2M+ segment simply adjusts — or whether higher transaction costs start to reshape behaviour in Cayman’s top-end property market.
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