by Cuba Journal staff
Don’t let the thrill of Cuba’a resurgence blind you to the risks of owning Cuban real estate because, if you are American, the options are narrow and risky.
For starters, US citizens who buy property in Cuba would be violating the Trading With the Enemy Act passed by the U.S. Congress in 1961.
And the Cuban government does not allow foreign ownership of real estate except in the case of narrowly defined developments that cater to foreigners.
That leaves a diminishing set of mostly risky options best defined as “under the table,” especially for Americans.
But, as is often the case with real estate investing, the best time to invest is during the risky period when lack of clarity causes others to hesitate.
An American buyer could consider funding a purchase through a Cuban resident friend – but the property would remain in the friend’s name – and be would subject to the whims of the friendship with no legal recourse in the event of a dispute.
The same legal risk applies when using a relative as a proxy. Alternatively, an American could marry a Cuban and own real estate in her name. But in the case of divorce, she would retain ownership of the house.
It is only recently that the Cuban government has allowed Cubans to buy and sell their homes. Presently, Cuban citizens are not permitted to own more than two houses.
This policy has helped to alleviate the housing shortage, but transactions must be in cash and often involve undocumented payments between parties to avoid additional taxes.
Another policy that dates back several decades is the permitted construction of certain condominium-style apartments that are restricted to foreigners. So, if you are not American, these units are an option to consider and are freely traded only among foreigners.
The visa category, “Real Estate Resident” (Residente de Inmobiliaria) is now listed along with other types of visas that are available for foreign real estate buyers. Effectively, there is a two-tier market for real estate in Cuba.
Despite rules and restrictions, some enterprising Cubans are creating markets for property. One such website, EspacioCuba.com, has many property listings on a website with look and feel of any US real estate site.
According to EspacioCuba, in October 2013 the Government allowed the self-employed to apply for real estate agent licenses (gestor de compra-venta de vivienda). Today, the real estate company has two offices and is planning a third.
There are definite signs of resurgence, as some Havana properties along popular streets and in trendy subdivisions undergo reconstruction.
Some reports indicate families with ties to the US are forming small, informal syndicates for purpose of real estate investment.
Perhaps these early investors will reap huge rewards for investing early.
But worrying problems remain lurking in the background – not the least of which is what happens to property expropriated from Cubans and foreigners alike after the revolution in 1959.