Real Estate Due Diligence in Cuba
Updated on Thursday 02nd June 2016
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When making a real estate due diligence in Cuba, it is important to know that until a few years ago, it was not possible for either Cuban citizens or foreigners to acquire and sell property in Cuba. The state demanded all property sales to be officially authorized and rarely gave permission to buy and sell property. As an alternative, the state gave permission to individuals to swap homes, which many times resulted in the creation of a black market of property swaps which went along with under the table side payments. However the legal setting has recently changed in Cuba, allowing foreign entrepreneurs looking to establish a company in the country to make property transactions as well.
Further developments in the Cuban real estate legislation
In 2011, though, everything changed when the Cuban government passed the Decree-Law 288 which allows Cubans, as well as foreign citizens who reside in Cuba, to buy and sell property at prices set by themselves. Therefore, real estate due diligence in Cuba reveals that the ownership is limited to one residence and one holiday home, though, and an asset taxation of 4% was introduced for buyers, while the sellers are charged with the same sum in income tax.
Property ownership in Cuba nowadays
After that, in 2014, the Cuban Foreign Investment Act contained a section which allows international real estate investments inside Cuba and enables at least partial foreign ownership of property, adding some other real estate rights for foreign citizens. Our Cuban lawyers can provide further assistance regarding the real estate rights for foreign nationals in the country.
Nowadays, real estate purchase made by foreign citizens in Cuba has to be effectuated in the following ways:
• through a joint venture with a local citizen;
• by an international economic association agreement;
• via an entirely owned foreign capital business.
Professional guidance in Cuba
While generally the real estate market in Cuba operates momentarily inside the legislation issued by recent reforms, there are still certain ambiguities and legacy issues which make it necessary for foreign investors to undertake thorough real estate due diligence in Cuba before making a property transaction.
In 2013, realtors were added to the list of professionals eligible for self-employment in Cuba and in certain ways this made the property buying procedure a bit more complicated. Values are seldom registered somewhere close to the real price which is actually paid for real estates and choosing trustworthy and legal joint venture partners is clearly a real concern.
When initiating a property purchase in Cuba, it is essential to benefit from professional assistance which can guide you through the entire process. We are a team of dedicated lawyers in Cuba who are here to offer you legal assistance when making your real estate due diligence in Cuba. Contact us and let us know what your investment goals and legal concerns are. We are more than happy to help you make a successful real estate purchase in Cuba.