Income tax in US Virgin Is.
June 07, 2013
INDIVIDUAL TAXATION
US citizens and US permanent residents are taxed on their worldwide income. Married couples may be taxed jointly or separately.
INCOME TAX
Income is taxed at progressive rates, the same rates as the federal income tax rates in mainland USA. Taxable income is computed by deducting income generating expenses from the gross income.
FEDERAL INCOME TAX 2010 FOR |
|
| TAXABLE INCOME, US$ | TAX RATE |
| Up to US$16,050 | 10% |
| US$16,050 - US$65,100 | 15% on band over US$16,050 |
| US$65,100 - US$131,450 | 25% on band over US$65,100 |
| US$131,450 - US$200,300 | 28% on band over US$131,450 |
| US$200,300 - US$357,700 | 33% on band over US$200,300 |
| Over US$357,700 | 35% on all income over US$357,700 |
| Source: Global Property Guide | |
FEDERAL INCOME TAX 2010 |
|
| TAXABLE INCOME, US$ | TAX RATE |
| Up to US$11,450 | 10% |
| US$11,450 - US$43,650 | 15% on band over US$11,450 |
| US$43,650 - US$112,650 | 25% on band over US$43,650 |
| US$112,650 - US$182,400 | 28% on band over US$112,650 |
| US$182,400 - US$357,700 | 33% on band over US$182,400 |
| Over US$357,700 | 35% on all income over US$357,700 |
| Source: Global Property Guide | |
FEDERAL INCOME TAX 2010 FOR SINGLE INDIVIDUALS |
|
| TAXABLE INCOME, US$ | TAX RATE |
| Up to US$8,025 | 10% |
| US$8,025 - US$32,550 | 15% on band over US$8,025 |
| US$32,550 - US$78,850 | 25% on band over US$32,550 |
| US$78,850 - US$164,550 | 28% on band over US$78,850 |
| US$164,550 - US$357,700 | 33% on band over US$164,550 |
| Over US$357,700 | 35% on all income over US$357,700 |
| Source: Global Property Guide | |
FEDERAL INCOME TAX 2010 FOR |
|
| TAXABLE INCOME, US$ | TAX RATE |
| Up to US$8,025 | 10% |
| US$8,025 - US$32,550 | 15% on band over US$8,025 |
| US$32,550 - US$65,725 | 25% on band over US$32,550 |
| US$65,725 - US$100,150 | 28% on band over US$65,725 |
| US$100,150 - US$178,850 | 33% on band over US$100,150 |
| Over US$178,850 | 35% on all income over US$178,850 |
| Source: Global Property Guide | |
Residents are entitled to some allowances and tax credits.
GROSS RECEIPTS TAX
Every individual doing business in the islands are liable to pay the 4% gross receipts tax in addition to the income tax. The first US$9,000 monthly income is exempted from gross receipts tax if annual gross receipts are less than US$225,000.
Capital gains on the sale of the rental property will not be subject to the gross receipts tax.
CAPITAL GAINS TAX
Income from the sale of real property is always considered "effectively connected income". Capital gains on real property held for more than one year are generally taxed at a maximum rate of 15%.
Capital gains received by taxpayers within the 10% and 15% tax brackets are taxed at a flat rate of 10% as of 01 January 2011. For all other taxpayers, capital gains are taxed at a flat rate of 20%.
Taxable capital gains are calculated by deducting the "adjusted basis of the property" from the "amount realized from selling the property". The amount realized from selling the property is computed by deducting selling expenses from the gross selling price. The adjusted basis of the property is the original cost of the property plus expenses deemed to have increased its value (i.e. capital improvements), less items which have notionally decreased its value (i.e. depreciation).
PROPERTY TAX
The US Virgin Islands currently imposes a real property tax at 1.25% of the property's assessed value. The property's assessed value is 60% of its actual value or fair market value. Thus, the effective tax rate is 0.0075% of the property's fair market value.
However, a new rate structure is being proposed wherein applicable tax rates vary depending on the classification of the property:
PROPOSED PROPERTY TAX |
|
| PROPERTY CLASSIFICATION | |
| Residential property | |
| Vacant land | |
| Commercial property | |
| Timeshare property | |