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The Truth about the USVI Stamp Tax

What Is a Stamp Tax for real estate?

When buying and selling property, there is a category of expenses that is used for recording fees. The Office of the Recorder of deeds will require these fees, in order to properly record a deed transfer that occurs in the U.S. Virgin Islands. One of these fees is the stamp tax. The stamp tax, which can also be called a real estate transfer tax, is a tax that can be imposed by local jurisdictions and states for transferring property between parties. This includes commercial, residential, and industrial properties. The taxes can range in price from small to large. The stamp tax in the U.S. Virgin Islands requires a payment 2% to 3.5%. If a property transaction is over $350,000, then it requires a mandatory 2.5% stamp tax.

The U.S. Virgin Islands consist of three islands. The islands are considered incorporated territory, which means if you have property in these islands you get the same constitutional protections and guarantees as you would in the United States. Different states in the United States have a variety of transfer tax laws, and there could be exceptions for different types of buyers based on income or buying status. For example, Maryland will exempt some first-time buyers from paying a percentage of the total purchase price.

How Does the Stamp Tax in the US Virgin Islands Work?

How much the property is valued at can determine the St John stamp tax. Sometimes it is believed that the value of the property is the contract price or the price that will be shown on the deed. This is generally the case, but there are exceptions to the rule. The assessed value of the property will be determined by the Tax Assessor’s Office by the Government of the U.S. Virgin Islands. The position the government takes is that the property value for these purposes must be at least the assessed value of the property. If one value is greater, the greater value is used to calculate the fees. For example, if a home is purchased for $400,000 and that is indicated on the contract, but the Assessor’s office assessed the tax value at $500,000, then the fees are going to be calculated based on $500,000.

  • Properties up to $350,00 will have a 2% tax
  • Properties from $350,001 to $1 million will have a 2.5% tax
  • Properties valued from $1,000,001 to $5 million will have a 3% tax
  • Properties valued over $5 million will have a 3.5% tax

Different states will also allow you to split the USVI stamp tax between a buyer and seller. For example, in Delaware, between 1.5% and 2% can be split between the buyer and seller. Before doing this it’s a good idea to check with a realtor or title company to make sure you are doing this in accordance with the jurisdiction’s practices. No matter who is going to pay the fee, in order to record the deed, the fee must be paid at the Office of the Recorder of Deeds.

These taxes are used differently in different states. Some states use these taxes to help with low-income housing and others use these to preserve open space in both residential and commercial areas.

Questions? Contact Holiday Homes of St. John today.

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