Global Property Guide

Financial Information for Residential Property Buyers


Rental income tax in Guam is low

April 10, 2012

INDIVUDUAL TAXATION


Guam oceanview condominiums for sale

The Government of Guam adopts a mirror copy of the US income tax structure where the 'Government of Guam' is put in place of 'the Government of the United States'.

Nonresident individuals are liable to tax on their income in Guam. Married couples can opt to be taxed jointly or separately.

INCOME TAX

Income of nonresident individuals is generally taxed at a flat withholding tax rate of 30%.

30% Withholding Tax

Nonresident individuals earning rental income and other fixed and determinable annual or periodic income which are not effectively connected with trade or business are taxed at a flat rate of 30%, withheld by the tenant.

Electing Business Income Option

Nonresident individuals earning rental income can elect to consider this income as effectively connected with trade or business. Through this option, the taxpayer will be taxed on his net income at progressive rates.

CAPITAL GAINS TAX

Capital gains incurred for the transfer of property in Guam is taxed as in the US. The taxable gain is computed by deducting the acquisition costs (adjusted for inflation) and transfer costs from the selling price.

Long-term capital gains are currently taxed at 15%. Short-term capital gains or gains realized within twelve months are taxed at ordinary income tax rates.


CORPORATE TAXATION

INCOME TAX

Local corporations can be fully owned by foreign individuals. A minimum of three incorporators are needed to set up a local company, and at least one incorporator should be a Guam resident.

Local corporations are taxed on their worldwide income. Taxable income is generally computed as gross income less all ordinary and necessary income-generating expenses, including depreciation, investment allowances, set-offs of losses, investment tax credit and foreign tax credit. Taxable income is then taxed at progressive rates.

CORPORATE INCOME TAX RATES

TAXABLE INCOME (US$) TAX RATES
Up to US$50,000 15%
US$50,000 - US$75,000 25%
US$75,000 - US$100,000 34%
US$100,000 - US$335,000 39%
US$335,000 - US$10,000,000 34%
US$10,000,000 - US$15,000,000 35%
US$15,000,000 - US$18,333,333 38%
Over US$18,333,333 35%
Source: Global Property Guide

RENTAL INCOME
Taxable income is computed by deducting income-generating expenses (such as maintenance and repairs, property taxes, management fees, etc.) and depreciation costs from the gross rent.

CAPITAL GAINS
Capital gains derived by legal entities are included in the gross income and are subject to the standard progressive corporate tax rates. Capital losses may normally be set off against taxable profits under general rules.


PROPERTY TAXE


Real Property Taxes

Real property tax is levied upon land and/or buildings. The rates are 0.5% on the assessed value of land and 1% on the value of the buildings. The assessed value is 35% of the appraised value or market value of the property.

Comments

Be the first to comment on this article!

Login or Register to submit a comment!
In order to promote open and spam-free conversations, Global Property Guide moderates commetns on all articles. You can expect that your comment will be published within 24 hours.