Guam: Overview
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Base expansion in Guam boosts house market
Guam is the hub of the western Pacific, undeniably Micronesia's most cosmopolitan destination - a true example of the great American melting pot.
Guam has only 168,000 inhabitants, on 541 sq. km. of land. Now about 7,000 US Marines and an additional 10,000 dependents are being transferred from the US base in Okinawa Japan. About US$8 to US$10 billion will be spent on infrastructure, housing and support facilities. Meanwhile tourism has strongly recovered, after a decade-long pause.
House prices are (unsurprisingly) rising and new construction starts have surged. The median price for a house is now US$155,500, up by 7.25% from US$144,995 in 2003.
There are few restrictions on foreign ownership of property. Foreigners are only allowed to buy one owner-occupied house or condominium in their personal names if they are not U.S citizens and have not declared their intent to become permanent residents (green card applicants).
For investment purposes, it is advisable for a foreigner to form a Guam corporation with at least one local shareholder/director. The corporation is free to buy as much property as it wants.
RENTAL YIELDS
Yields in Guam are high up to 14%
Residential property prices are around US$1,100 to US$1,450 per sq. m.
A 220 sq. m. house with a big lot might cost about US$250,000. The rent for the same house might be around US$3,000 per month, thus producing a rental yield of 14.4%.
Yields on smaller properties range between 8% and 13%.
TAXES AND COSTS
Rental income tax in Guam is low
Effective Tax Rate on Rental Income |
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| Monthly Income | US$1,500 | US$6,000 | US$12,000 |
| Tax Rate | 4.9% | 6.1% | 7.5% |
| Click here to see a worked example | |||
| Source: Sardoma & Associates Disclaimer | |||
Rental Income: Nonresident foreigners earning rental income through a company are taxed at the progressive corporate tax rates.
Capital Gains: Capital gains on property sales are taxed at 15%.
Inheritance: No inheritance tax is payable by foreigners.
Residents: Taxation proceedures for residential aliens are similar to those in the mainland US.
BUYING GUIDE
Total costs are low to moderate in Guam
The total round-trip transactions costs are around 6.6% to 12.6%. The biggest cost is the real estate agent, at between 4% and 10% of the property's value, payable by the seller.
The buyer shoulders all other costs - the escrow fee, title insurance, recording fees, all of which amount to about 2.6% of the property's value.
LANDLORD AND TENANT
Guam's tenancy laws are pro-landlord
Guam's law is pro-landlord, despite the wave of pro-tenant legislation in the mainland US.
Rent: Rents can be freely negotiated by landlord and tenant. Guam's Rent Control Law applies only to verbal rental agreements.
Tenant Eviction: Eviction of tenants for default in payment of rent is relatively simple and straightforward.
ECONOMIC GROWTH
Tropical melting pot
Guam has beautiful and secluded beaches, world-class diving and snorkeling, and a variety of cultural and historical sites, activities and events. Today, the major components of the island's economy are the territorial government, tourism, the U.S. military, construction and the garment industry. Known for duty-free shopping, Guam's American culture is itself a tourist attraction.
Guam became an unincorporated territory of the United States in 1950. In addition to the indigenous Chamorros and 'stateside' Americans, the island has a large population of Filipinos, Chinese, Japanese, Koreans, and Micronesian Islanders, as well as a few Vietnamese, Indians, and Europeans.
The Island enjoys a steady tropical climate at an almost constant 25-30°C (77-86°F) all year round. The dry season runs from December to June (May to July are hot), the rainy season runs for the rest of the year.
From June to November, Guam is hit by western Pacific typhoons. In 2001, the island suffered massive damage from two powerful typhoons, and about 35,000 people were left homeless.
RESIDENTIAL PROPERTY AROUND THE WORLD
Asia & Pacific
Bubble fears prompt foreign ownership limits in China
America & Caribbean
The slowdown of the U.S. housing market
Middle East and Africa
Bahrain is open to foreigners and sizzling hot
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| RESIDENTIAL PROPERTY FACTS | |
| Price (sq.m): $1,167 For a 120 sq. m. property, usually an apartment. | Rental Yield: 12.86% For a 120 sq. m. property, usually an apartment. |
| Rent/month: $1,500 For a 120 sq. m. property. | Income Tax: n.a. Assumptions: Owners are a non-resident couple drawing US$ / €1,500 per month in rent, with no other local income. |
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Roundtrip Cost:
9.6%
The total cost of buying and then reselling an apartment. Includes: * all transaction taxes and charges: * lawyers' and notaries' fees * agents' fees Assumptions: The buyers are non-resident foreigners. The apartment cost US$250,00 / €250,000. |
Cap Gains Tax: 12.5% Assumptions: The property was bought for US$250,000 / €250,000, and sold 10 years later, after a 100% appreciation. |
| Landlord & Tenant Law: Pro-Landlord Rating is based on a detailed study of each country’s law and practice. | |
JANUARY 2006
- Guam’s Real Estate Market Watch, Part 2 - Kuam News
- Guam’s Real Estate Market Watch, Part 1 - Kuam News
- Additional 13,000 Korean Travelers To Be Expected In Early 2006 - Guam Visitors Bureau
DECEMBER 2005
- AG’s suit may halt Real Property Tax payments for residents - Kuam News
- Korea Travel Agents up Guam Sales - Guam Visitors Bureau
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