Income tax on rent, worked example, in US Virgin Is.

Taxation Researcher | September 01, 2010

Non-resident couple´s joint monthly rental income1 US$1,500 US$6,000 US$12,000
Annual Rental Income US$18,000 US$72,000 US$144,000
Less Costs2 (20,000) (40,000) (60,000)
Less Depreciation (10,455) (34,848) (69,697)
= Taxable Income US$0 US$0 US$14,303
Income Tax Rates3
Up to US$8,375 10% - - -
US$8,376 - US$34,000 15% - - 2,145
US$34,001- US$68,650 25% - - -
US$68,651 - US$104,625 28% - - -
US$104,626 - US$186,825 33% - - -
Over US$186,826 35% - - -
Annual Income Tax Due US$0 US$0 US$2,145
Any Other Taxes nil nil nil
4% Gross Receipts Tax4 - - US$1,440
Annual Tax Due US$0 US$0 US$3,585
Tax due as % of Gross Income 0% 0% 2.49%
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1 The property is jointly owned by husband and wife, but then taxed separately (50% upon each partner). The nonresident couple is electing to treat their income as effectively connected income.

2 Estimated values. Allowable deductions are insurance payments, commissions, management fees and expenses associated with rent collection, repairs and maintenance expenses.

3 These income tax rates are for married couples filing separately. Nonresident married couples are not allowed by law to file jointly in the US Virgin Islands.

4 Every individual doing business in the islands are liable to pay the 4% gross receipts tax in addition to the income tax. If annual gross receipts are less than US$225,000, the first US$9,000 monthly income is exempted from gross receipts tax.