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
MARRIED INDIVIDUALS FILING JOINTLY

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
FOR HEADS OF HOUSEHOLDS

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
MARRIED INDIVIDUALS FILING SEPARATELY

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
TAX RATE
Residential property
0.0036%
Vacant land
0.0046%
Commercial property
0.0065%
Timeshare property
0.0110%

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