New STJ villa tax

I think if you ask any villa owner they will tell you the USVI currently has the Lowest Property Tax Rate of anything else they own anywhere.

I think if you ask any villa owner they will tell you the USVI currently has the Lowest Property Tax Rate of anything else they own anywhere.

True, but insurance rates are very high. And if one has a mortgage than full value must be insured.

I think if you ask any villa owner they will tell you the USVI currently has the Lowest Property Tax Rate of anything else they own anywhere.[/quotte

True, BUT we don't get much for our taxes.
Lousy public school system, bad roads, terrible garbage and dump system, no support for animal shelters, ridiculous police department, fire department a rip-off, and on and on. But the gov and senate get paid more than almost any state on mainland, education dept oversupplied with highly paid administration, etc, and rest of gov't the same. Too many gov't employees, many of whom do minimal work. Along with so much corruption and waste. And on and on So we pay little but giving the gov't more money would not improve things without a never-likely-to-happen total overhaul of gov't.

 

In response to gumbo, i'm sure many of our "leaders" would like to see the wealthy out of the islands.

"The intent of the Bill is to give those that build Villa properties with the sole purpose of using them for business (with no intention of using them as a their personal residence) to have their own identity. It will not affect those that rent their properties long term, or use them in the AirBnB like programs who live in their properties but rent them occasionally.: The Bill's intention is to protect the local property owners from being unfairly taxed out of the market, and from losing their homes.

The "town meeting" is a farce.

I'm not sure that's even legal because you're targeting a specific group for different treatment.
Plus, how will they differentiate?
To me, it's like opening Pandora's box.
Once it's opened, they'll be looking to increase or tax something else because they need more money to misspend, misuse, mismanagement, waste and steal.

I am going to the town Hall meeting on the 19th. As a full time resident and one who occasionally (70 days +/- per year) rents out my home through VRBO, Airbnb, etc, I am very interested in this conversation.

I have also formed a private group on FB for Vacation property owners and managers where this discussion is of course top of the feed and ongoing. It is being discussed on groups all over FB and the general consensus from both residents, long time and recent, and state sider owners, is that the bill is really not well thought out and will hurt the economy.

On the other hand, it is also acknowledged, and this is a problem everywhere as this segment of the tourism industry is the fastest growing in the world, that corporate structures and investors have latched onto the market in purchasing/building properties solely for rental. This is warping the market. It hurts part time vacation rental property owners through glutting the market with inventory that exceeds demand, drives out long term rental supply, and alienates full time residents who live next to noisy unmanaged or poorly managed properties.

So while I think the bill as written is not going to work, I also agree that there needs to be a discussion about what is an acceptable compromise between those of us trying to defray costs (and at best are breaking even) and who operate our rentals responsibly, and those who are in the vacation rental market purely for profit.

I also think that the Tourism Department needs to pay attention to the Villa Rental Segment of USVI fly-in visits and work with owners and managers to help form policy rather than waiting for random senators to float bills without fully understanding the market.

Anyone else attending the meeting on the 19th?

I'm in FL or I'd definitely attend.
I do know some people who will be attending.
I hoped it's standing room only!

This reminds me of a good friend who told me a story about a condo complex in St. Martin that passed new rules in its bilaws that all resident needed to live on the premise 180 days a year, or pay much more expensive condo fees. Many owners could not afford the extra expense and were forced to sell. But is this unequal taxation proposal even legal in the US? In the BVI who knows, but are there property rights and rules against unequal taxation in the US? I'm asking, chime in if you know.
My friend and other owners in that complex are still in litigation.
The difference in this scenario is a government body is passing this same type of unequal taxation to existing owners who purchased these villas, budgeting rentals into offsetting the cost of purchase to pay for repairs, supplies, power, hurricane insurance....to support their dream of owning in the Carribean. This will break many budgets for people who are bringing weekly business to islands that needs tourism. It doesn't sound moral, it doesn't make much sense for tourism or the economy of the USVI, and is it even US legal?

"It doesn't sound moral, it doesn't make much sense for tourism or the economy of the USVI, and is it even US legal?"

None of those concerns interest the legislature.

I am not an accountant, but my understanding is that the IRS considers this issue quite clearly (see Publication 527, chapter 1):

- If you are renting and not using the property at all, it is considered a business and you file Schedule C. You can deduct losses from this business against other income. If you have a profit you have to pay self-employment taxes.

- If it is your home that you are renting, you file Schedule E, and do not need to pay self-employment taxes but cannot deduct losses.

The IRS considers that the rental home (even a second residence) is your home if (see Pub 527, p.18):
"You use a dwelling unit as a home during the tax year if you use it for personal purposes more than the greater of:
1. 14 days, or
2. 10% of the total days it is rented to others at a fair rental price."

So, in my opinion if you meet this test you should be taxed at the residential rate.

If you rent all year, then MAYBE the rate to use could be commercial (which is 1.88 times the residential rate). But even this is unfair since you may not be able to be in your home for the year because of family, health, or work related issues.

Everybody I know who rents is because they want to mitigate expenses until they move to the USVI or they want to mitigate expenses while they travel or they have to rent while they are off island because of work.

Bottomline, the current property rate structure is fine and would not change it. The focus should be on ensuring collecting the hotel and gross revenue taxes and of course reducing expenses by the legislature and governor, as has been discussed here and the press.

Thanks for your post LoveUSVI.

My thoughts on the matter:
I’d like to add that we get very little for the property and all the other taxes we do pay:

No mail delivery to our homes, terrible roads, no painted lines on many roads, terrible signage and lighting on these roads, potholes that’ll take your axle out, shabby, inadequate, expensive utility services, constant power outages, lack of bush and tree trimming on roadsides, electrical poles (a friend said that if a bird craps on their power line, power goes out), trash everywhere, lack of recycling, no trash pickup at homes, bankrupt hospitals, lack of senior care facilities, lack of individual healthcare insurance… seriously the list goes on while the government continues to spend uncontrollably and look to individual and business taxpayers to fund THEIR wasteful spending.

How many CASH ONLY businesses (ferry services being subsidized and taxi drivers come to mind) pay their appropriate taxes, gross receipts, etc.?

Quite frankly, I’m surprised that targeting a specific group for increasing taxes is even remotely legal? Has a legal opinion been sought prior to the creation of this bill?

Remember, Commercial businesses took the VI Government to court over inequality of property taxes previously in early 2000…..and won, years later, while millions of dollars where spent and paid by VI Government/taxpayers to defend, then we paid double property taxes per year, for years, after the case was adjudicated.

Where are our Senators crying out about crime, the blatant NEPOTISM in this administration? Where is a financial accounting of what our governor has spent, how many family members in his administration, how much the legislature spent this year, how many contracts that have been handed out, have excruciating delays, massive cost overruns, deplorable results (and eventual jail time), how many times does our government give away our money for their Pet projects or waste time passing unfunded bills while not paying what they owe and continuously sticking it to taxpayers to fund their ineptitude? GERS is a mess.

I, for one, am sick of it.
Senators need to think long and hard about reducing their bloated salaries, expenses, “perks”, and numbers before they pass any more bills to burden the already overburdened public.
Clean up your own act!

How many CASH ONLY businesses (ferry services being subsidized and taxi drivers come to mind) pay their appropriate taxes, gross receipts, etc.?

This is only slightly relevant to your point, which I agree with -- I find a lot of people still don't know this: The ferries now accept credit cards. (The barges don't, but they will take local checks.)

I'm not sure that's even legal because you're targeting a specific group for different treatment.
Plus, how will they differentiate?
To me, it's like opening Pandora's box.
Once it's opened, they'll be looking to increase or tax something else because they need more money to misspend, misuse, mismanagement, waste and steal.

I agree, Mr. Blydens reasoning in the released statement doesnt even sound legal. I bet it would get stopped in court.

In response to gumbo, i'm sure many of our "leaders" would like to see the wealthy out of the islands.

Wealthy people create opportunity. Think of the wages paid building those houses. Not to mention all the money they spend constantly. It isn't their fault the government can't control their spending. They contribute a lot to these islands.
I know a good amount about the short term rental business. Most of them offset some of their expenses of owning those houses. Most dont make a large profit, if any at all. A large part is paid out in the form of wages too locals. Maid service, land scapers, pool service, maintenance ect.
Mr. Blyden is shaking down the wrong people. Maybe meters in the taxis would help?

One of the most irritating things to me about this proposal is that it just reeks of laziness. Just like increasing hotel tax, gross receipts, sin tax, etc. They continue to over tax the people who are actually paying their taxes instead of doing their due diligence and collecting taxes from the people who don't pay or who don't fully pay. In all of my years here I have come across very few businesses who pay what they are supposed to and a WHOLE lot of individuals who either don't pay at all or who severely under claim. Even if we just started with hitting up all of the licensed businesses on all of the islands and made sure they were paying employees as employees instead of subcontractors would have a big impact.

In Florida, there is a significant difference in taxes between investment properties (including rental businesses) and owner occupied properties.

Owners residing in their properties receive homestead and a "Save Our Homes" cap that limits the escalation of the value of the property to I think 2% annually. The "Save Our Homes" cap is now transportable if you move to another house in Florida.

A new FL owner-occupied residence will be taxed at market to start - so you cannot predict your property tax liability from what the previous owner paid. I have witnessed new neighbors getting their first tax bills - one planned on a $4,000 bill but instead received a $12,000 bill. I have a friend whose neighbors are paying $37,000 annually in taxes for a new house on the water.

Investment properties in FL have no tax escalation protection and are appraised annually at market. I had an investment property's tax bill increase from $600 to $6,000 in less than 4 years.

So to answer your question, definitely YES it is legal if the legislation is structured properly. Welcome to big America.

"It doesn't sound moral, it doesn't make much sense for tourism or the economy of the USVI, and is it even US legal?"

None of those concerns interest the legislature.

I would not be overconfident that the proposed tax classification is illegal. They are targeting the use of the property, which is not a discriminatory characteristic. I assume that it would be illegal if they said, as they have in the past, people born in the USVI pay a different rate, for the same use, as those not born there.

The arguments we need to focus more, as said by others here, are:

- They need to demonstrate that the governor and legislature have stopped frivolous spending

- They need to stop fraud

- They need to collect the amounts due in property taxes and stop illegal schemes at auctions

We need to demand that:

- Serious studies be performed to understand the impact on the economy on increasing real estate taxes so significantly

- Dedicate any increases in taxes to improve roads

- Use the same definition of a home as the IRS

I believe that most people who rent a house are doing it temporarily until they retire or while off island due to work or travel. These people will be able to eventually vote. And, in the meantime, can have their opinions heard and impact elections.

As we were reminded yesterday on the 4th of July, there is one point in which people say enough is enough and they take action.

One of the most irritating things to me about this proposal is that it just reeks of laziness. Just like increasing hotel tax, gross receipts, sin tax, etc. They continue to over tax the people who are actually paying their taxes instead of doing their due diligence and collecting taxes from the people who don't pay or who don't fully pay. In all of my years here I have come across very few businesses who pay what they are supposed to and a WHOLE lot of individuals who either don't pay at all or who severely under claim. Even if we just started with hitting up all of the licensed businesses on all of the islands and made sure they were paying employees as employees instead of subcontractors would have a big impact.

(tu)(tu)(tu)

A TON of tax $ would be generated, if taxi meters were in use.

Mr. Blyden is shaking down the wrong people. Maybe meters in the taxis would help?

A TON of tax $ would be generated, if taxi meters were in use.

And if we had Uber and Lyft for added competition.

Sometimes I wonder if our "leaders" are trying to turn us into Haiti. Yes i have lived there.

From the legislature's website re: Marvin Blyden:

"Senator Marvin Allen Blyden was born on St. Thomas, U.S. Virgin Islands to James and Mayrose Blyden from the Savan community. The 11th of 13 children, Marvin grew up in Estate Nadir and is a proud product of the Virgin Islands public school system.

After completing Dickerson Business School in 1987, Marvin managed for a fortune 500 company, namely Pepsi-Cola. He returned home to the U.S. Virgin Islands in 1991 and worked as a Manager at the prestigious Frenchman's Reef Hotel. There he gained a wealth of knowledge during his tenure and was recognized for his talents. He later was recruited to manage the first Taco Bell restaurant in the U.S. Virgin Islands."

I looked and could not find a "DICKERSON" business school anywhere.

Any ideas??

In Florida, there is a significant difference in taxes between investment properties (including rental businesses) and owner occupied properties.

Owners residing in their properties receive homestead and a "Save Our Homes" cap that limits the escalation of the value of the property to I think 2% annually. The "Save Our Homes" cap is now transportable if you move to another house in Florida.

A new FL owner-occupied residence will be taxed at market to start - so you cannot predict your property tax liability from what the previous owner paid. I have witnessed new neighbors getting their first tax bills - one planned on a $4,000 bill but instead received a $12,000 bill. I have a friend whose neighbors are paying $37,000 annually in taxes for a new house on the water.

Investment properties in FL have no tax escalation protection and are appraised annually at market. I had an investment property's tax bill increase from $600 to $6,000 in less than 4 years.

So to answer your question, definitely YES it is legal if the legislation is structured properly. Welcome to big America."

Actually, GatorMom, minor changes...non homesteaded ( second home, rented out or not), and business property tax increases are capped at 10% and Homestead can go up 3%.

But to your point sure it's legal ..in Florida. Property Tax is a states rights issue. I don't think the dual standard has ever been challenged at the Federal level.

Also... big difference...in Florida, every year cities and counties have to come up with a budget that must be approved and marked to the property tax, dollar for dollar, to justify any rate increase....Unlike Blydens proposal to just arbitrarily raise rates 400% because they "need to raise revenue".

Tax rates in Florida are significantly higher than the usvi. (2.23% of appraised value subject to the caps when I last paid taxes in St. Pete) As Alana pointed out there are significant services provided that are not, here. Also Florida has no State income tax, unlike the USVI which gets 100% of Federal tax from residents.

I bring all this minutiae up because Florida is going to come up as a comparison since tourism is its #1 industry as well. And those who plan to actively object need to be ready with the logical answers.