Mansion Global Picks U.S. Virgin Islands As A Top Place For Americans To Live In The Caribbean For Its Favorable Tax Rates
MANSION GLOBAL PICKS USVI: A top online property listing service said today that the U.S. Virgin Islands is one of the best places in the Caribbean for United States natives to relocate for the best tax rates. The online news source also mentioned St. Lucia and the Cayman Islands as viable options.
NEW YORK — A person describing themselves as a United States resident writes in to the “premier digital destination connecting the world’s affluent real estate buyers with prestige properties across the globe” asking where in the Caribbean is the best place to live tax wise.
The answer, according to Mansion Global an online listing service for upscale properties?
The U.S. Virgin Islands, of course!
Every week, Mansion Global poses a tax question to real estate tax attorneys. Here is this week’s question.
I’m a U.S. resident looking to buy a vacation home in the Caribbean. Which islands have the most favorable tax rates?
If you open a bank account to pay local expenses, fund improvements, accept rental payments, you may have to file additional IRS forms, depending upon the value in the account or the value of the real estate owned by the entity, he said. So be sure to advise your accountant of all foreign holdings.
Given all the above, Miles Plaskett, partner at the Miami law firm of Duane Morris, suggested three Caribbean islands for consideration:
The U.S. Virgin Islands. “This is a sentimental favorite for me,” said Mr. Plaskett, a Virgin Islands native. Real property is taxed at 1.25% of the property’s assessed value, “which is 60% of its actual value or fair market value for an effective tax rate of .75% of the property’s fair market value,” he said. For a $1 million property, the real property tax rate would be 1.25% of $600,000 (60% of the assessed value), or $7,500.
In addition, the investment potential, especially on the larger island of St. Croix, is very good, and the islands are part of the United States, which makes investing easier, Plaskett pointed out.
Capital gains taxes range from 15% for taxpayers in the 25% to 35% tax brackets to 20% for those in the 39.6% tax bracket, Plaskett said. However, gains on property held for less than a year are added to your personal income and taxed at your ordinary income tax rate.
When you sell the property, you are required to withhold 10% of the selling price as tax. This is later credited as advance payment for capital gains tax.
Other countries or territories in the running according to Mansion Global which is owned by Dow Jones and affiliated with the Wall Street Journal are: St. Lucia and the Cayman Islands — each of which are likely to flag an IRS audit, experts say.
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Miles Plaskett is the brother of Dean Plaskett, the former commissioner of Department of Planning and Natural Resources (DPNR) under Gov. Charles Turnbull.