The U.S Virgin Islands Stamp Tax: How Does It Work?

USVI Real Estate Transfer Tax — Or, Stamp Tax

If you are looking to buy or sell property in the United States Virgin Islands, you must have heard about real estate transfer tax, otherwise referred to as stamp tax.

In real estate transactions, various payments are typically required for the proper recording of the deed. These payments encompass stamp taxes, deed recording fees, mortgage fees, and other related expenses. This article focuses on the real estate transfer tax, aiming to provide insights beneficial for future real estate transactions.

Firstly, a stamp tax is imposed by state or local authorities to facilitate the transfer of real estate property within a jurisdiction. This tax applies to residential, commercial, and industrial properties.

Stamp taxes are obligatory for property transfers among individuals or entities. In the United States, including the Virgin Islands (St. John, St. Thomas, St. Croix, and Water Island), properties are subject to national stamp tax regulations. The tax rate varies based on the property’s value, with higher-value properties incurring a higher percentage tax.

The USVI stamp tax rates are as follows:

• 2% for properties valued at $350,000
• 2 ½ % for properties valued between $350,001 and 1 million
• 3 % for properties valued between $1,000,001 and $5 million
• 3 ½ % for properties valued above $5 million

These rates serve as a general guideline, and for precise information, contacting an Agent is recommended.

Certain transfer tax laws grant exemptions to specific buyers based on income levels, such as first-time buyers, who may be excluded from paying a certain percentage of the total tax.

Regarding payment for deed recording, mortgage fees are typically covered by the seller, while recording fees are the buyer’s responsibility. The stamp tax payment can pose logistical challenges as it may be paid by either party or split between them. Consulting an attorney before entering a property sale contract in the US Virgin Islands is advisable.

The revenue generated from stamp taxes is primarily allocated to funding affordable housing initiatives in the Virgin Islands and the United States.

Questions? Contact Islandia Real Estate Today.