US Virgin Islands have simple taxation policies. Although the rate of income tax for individuals and firms is set at zero, tax is usually assessed regularly. Most people who sell or buy property in the Virgin Islands are not aware of the stamp tax they are required to pay to get an ownership transfer. Here is an insight on stamp tax in the US Virgin Islands.
What is a Stamp Tax?
Stamp tax refers to the fee paid when real estate is transferred from one party to another. When a property seller pays the necessary transfer fee to the county or city, an ink stamp is usually impressed on the property deed. However, the buyer may be asked to pay the stamp tax. The levy collected is often used to fund various community projects including schools and parks.
How Does Stamp Tax Work?
In the Virgin Islands, a stamp tax is levied on individual transactions. Mostly, it is essential in real estate transfers and shares transfers in firms with real estate property. Typically, the property value determines the rate of stamp tax assessed.
The following is a breakdown of stamp taxes in the U.S. Virgin Islands as of 2015:
- 2% for properties valued up to $350,000
- 2.5% for properties valued from $350,001 to 1 million
- 3 % for properties valued from $1,000,001 to $5 million
- 5% percent for properties valued over $5,000,001
Stamp Tax in the USVI
The Contracts of Sale of property in the Virgin Islands determines the expenses which the buyer and seller will pay in a real estate deal. Recording fees are included in particular costs. They are essential for the Recorder of Deeds to record a deed. They include a release of mortgage, release of lien, stamp taxes and deed recording fees. Often, the buyer pays for the recording of deed expense while the seller is responsible for the release of mortgage and lien fees.
Customarily, the real estate transfer tax fee is negotiable. It may be allocated to the buyer or seller. It can also be split between both parties. For the seller to have a deed record, it is crucial to provide proof of payment for the St John stamp tax fee.
Real Estate Transfer Tax
Real estate transfer tax is essential for real property to be transferred to another party. It includes commercial, industrial and residential properties. Generally, a stamp tax of up to 3.5% is imposed on property transactions in the Virgin Islands.
Property owners in the islands have the same constitutional rights and protections as those in other parts of America. However, states such as Maryland have different transfer tax statutes that include exemptions some property buyers based on their income level and buying status. Also, they exempt first-time property buyers from a particular tax total percentage.
Are you bothered about paying stamp tax in the US Virgin Islands? Consult a Recorder of Deeds to determine the required stamp tax. Some islands have different legal requirements to split the tax.