|Published Articles on Real Estate - Anguilla Life Magazine|
A disclaimer, right up front: It has been very tough trying to get consistent information on portions of this topic--especially those portions that reference inheritance and tax issues. As such, the information that follows is to the best of my knowledge accurate. If anyone has contradictory (or, preferably, supportive) evidence or information about the points raised, I'd greatly appreciate being so advised-I'll include any new insights in a subsequent article. OK…here goes.
There are two primary ways for the proprietorship of land to be registered in Anguilla-either personally (normally under individual or joint proprietorship) or through a corporation (most often using a Specified Private Company or a Limited Liability Company). Insofar as title can be registered in these different formats, the question must inevitably be asked: Which type of ownership is preferable-and why. However before exploring the intriguing differences, it might be best to first look at a few of the similarities.
The names of all property owners on Anguilla are recorded on parcel specific land registers located at the Department of Lands in The Valley-these are public documents that can be checked by any interested party upon request. Either the personal name or the corporate name will appear in the proprietor section, along with the proprietor's address-in the case of a personal owner, the home address is noted; in the case of a corporate owner, the address of the company's registered office is recorded. However, corporate ownership does not provide personal anonymity, as the names of all directors and shareholders of all companies that own real estate in Anguilla are (or should be) recorded at the Registry of Companies--which is located just about fifty yards from the Department of Lands.
With reference to expatriate property ownership, an Alien Land Holding License is required to register title regardless of the type of ownership employed-if an applicant applies personally, the License is issued in the applicant's personal name; if an applicant applies for corporate ownership, the License is issued in the company name (provided the listed and identified directors and shareholders meet with ExCo approval). However, with these basic similarities in mind, more complex differences quickly appear when looking at the key issues of inheritance and transfer taxes-differences that have special implications for expatriate property owners.
If real estate is personally and jointly owned whereby one of the joint owners dies, title can be transferred to the surviving owner by completing a simple "Deletion on Death" form that must be submitted to the Department of Lands along with the deceased's Death Certificate-in such a scenario, if the property is owned by expatriates there isn't any need to apply to ExCo to change the underlying Alien Land Holding License. However, if a property is personally and individually or jointly owned whereby the proposed inheritor is not a Belonger or does not possess an Alien Land Holding License authorizing him to own the property prior to the proposed inheritance, he must apply for a license in order to have his name registered as a new proprietor-in such a scenario, a License is normally (but not necessarily) granted.
The corresponding inheritance tax issues are also quite interesting. In matters of inheritance the basic transfer tax payable is 1%, but that fee only covers the stamp duty payable under the Stamp Act (which is ordinarily 5%)--it does not include the stamp duty payable under the Alien Land Holding Regulation Ordinance (which is ordinarily 12.5%, however if the inheritor is a "spouse, or father or mother, or son or daughter" the stamp duty payable is a nominal US$80). As such, it is possible that an inheritor who is neither a Belonger nor in a category identified on the exemption list might have to pay up to 13.5% of the value of the inherited property-however, if the inheritor is not a Belonger but is in a category identified on the exemption list the Stamp Duty due would be 1% plus US$80.
If, on the other hand, a corporation owns property, although the company itself never dies (unless, of course it is liquidated or struck from the Company Register for not filing annual returns, for example), the shareholders and directors of the company inevitably do pass away. In the case of an inheritor who is not a Belonger receiving shares in a company that owns land, the inheritor must apply for an Alien Land Holding License to have his name legally registered as a new shareholder-in such a scenario, once again, a License need not be (but normally is) granted. Although the Registrar of Companies might accept and register a share transfer not knowing the company owns land and that a License is therefore required, such an acceptance and registration would not be legally valid if challenged.
The inheritance of shares in a company that owns land does not require the property's registered title to change, as such there is no title transfer on which to impose stamp duty--therefore, the 1% transfer tax levied at the time of inheritance can be saved (however, this is a savings which might well be offset by the cost of incorporating the company and maintaining it over time). Nevertheless, expatriate inheritors still face the possibility of stamp duty being assessed on the License itself, which could be (as stated above) as high as 12.5% of the assessed value or as low as a flat fee of US$80. In the event the stock of a deceased shareholder is inherited by a fellow shareholder of the same company (who, by definition, already has a License), the inheritor would nonetheless have to apply for permission to have his License amended to own the additional shares-with the same potential tax liabilities of having to pay up to 12.5% of the assessed value of his portion of the inherited property if he is not in a category identified on the exemption list, but only having to pay US$80 if he is on the list.
However, perhaps the most intriguing aspect of company ownership of property lies in the fact that the issuance of new shares (as opposed to the transfer of existing shares) is not liable to property transfer taxes. Although this fact does not change the requirement that the recipient of the new shares obtain an Alien Land Holding License if he is not a Belonger, the License would not carry with it any taxable consequence. This is potentially quite useful in the event, for example, a shareholder knows of his impending death-in such a scenario, that shareholder could (with the concurrence of other shareholders, if necessary) issue new shares to dilute the value of the stock that will be transferred upon his passing, thereby reducing the tax liabilities to the inheritor. In fact, this same opportunity exists for the sale of property owned by a company-i.e. a vendor can issue new shares to a purchaser that are not subject to tax in advance of transferring those shares that are, thereby reducing the tax burden to the purchaser by diminishing the value of the transferred shares.
As Anguilla moves forward and as deals become more complex and as existing property owners pass away leaving properties of higher and higher value to their inheritors, it will be interesting to see how ExCo reacts to License applications that revolve around issuing new shares in land owning companies and the subsequent transfer of those shares that were previously in existence. In addition, it will be quite interesting to see how ExCo treats the stamp duty payable on Alien Land Holding Licenses when inheritors are not Belongers-be the inheritors family members of the deceased or not. Such questions are especially interesting when one keeps in mind that ExCo has full discretionary powers of acceptance and is not obligated to approve License Applications--nor is it required to waive or reduce the stamp duty payable on any of the Licenses it does approve.
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