New law creates real estate market in Cuba

In a move that could reshape the Cuban economy, the Cuban government announced a new law that allows fort he sale and purchase of real estate („Ley de vivienda“). The law places some limitations including a prohibition of the ownership of more than one residential home and one vacation home. Also, only Cuban citizens living in the country (including Cubans with a permanent residence abroad – PRE) or foreigners with permanent residences in Cuba may participate in the transactions.

In parts, similarities can be found with the provisions in Austria especially in respect with the ownership of apartments. The new law provides for similar rules with respect to the requirements of a minimum area of 25 m², separate supplies of water, gas and electricity and a complete shower room with access from the apartment. The fulfilment of these conditions has to be confirmed by certificate of an architect.

The applicable tax rate of the real estate transfer tax is 4%. Taxable base is the purchase price, otherwise the fair market value as determined by the architect.

The form of payment is made under a type of escrow system by a cheque, issued by a bank that holds the purchase price in escrow until the transaction is closed. Furthermore, the provision of evidence of the source of funds is required to avoid money laundering schemes.